Debit cards are popular. Like, really popular.
Research shows that nearly half of adult Americans use debit cards as their main form of payment, accounting for billions of transactions.
As a bonus, some debit cards offer rewards, similar to credit cards. So, if you’re one of the many using a debit card — or looking to upgrade yours — keep reading. We’ll explore why you might consider getting one, plus we’ll look at the best cards available today.
Why Some Bank Debit Cards Don’t Offer Rewards (Anymore)
After the 2008 financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law in 2010. The goal was to stabilize and reform the financial industry.
Before it passed Congress, lawmakers added the Durbin Amendment — named after Sen. Dick Durbin of Illinois — to the act. This amendment was introduced to curb processing fees for debit card purchases.
When you use a debit card to make a purchase, the merchant pays an interchange or swipe fee. This fee goes to the bank that issued the debit card. Banks said these fees covered the costs of providing debit cards and monitoring accounts for fraudulent activity.
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However, retailers argued they were too high. Before the act’s passage, retailers paid up to 44 cents per debit card transaction, according to Reuters, which made it difficult for some businesses to accept them.
After Dodd-Frank passed, the cap fee was reduced to 21 cents. (It’s worth noting credit card interchange fees were not affected.)
As a result, the financial incentive for banks to offer debit card rewards just isn’t what it used to be.
Why You Should Consider a Debit Card That Offers Rewards
Just because debit card rewards aren’t flowing like they used to doesn’t mean you shouldn’t keep your eyes peeled for them.
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Debit cards that offer rewards are appealing for a few reasons:
- Your bank may only charge a small — or no — monthly (or annual) fee to use it.
- They’re good if you want to monitor your spending and find credit cards too tempting.
- Since it’s money from your account, there’s no monthly balance owed or accumulated interest to worry about.
- The REWARDS: anything from cash back to points to discounts on qualified purchases.
7 Debit Cards That Offer Rewards (Plus a Bonus!)
We picked several options that could work for you.
1. American Express Serve® Cash Back
The American Express Serve Cash Back option is a prepaid debit card. (To be clear, it’s not connected to a checking account.) When shopping online or in stores, you can earn unlimited 1% cash back on your purchases. Bonus: The cash back is immediately available to use after you earn it.
Other features include free ATM withdrawals at over 30,000 locations, fraud protection and 24/7 customer service.
Card price: $0 online or $3.95 in stores
Monthly or annual fee: $7.95 a month (no fee in Texas, New York or Vermont)
2. Bank of America BankAmeriDeals®
Bank of America has a program called BankAmericaDeals for BoA card holders. Existing customers can log into online banking or use the mobile app to see available deals (for example, 15% cash back at Petco). You’ll earn cash back on these deals when they use an eligible BoA debit or credit card to make a purchase. You can also earn BankAmeriDeals Coins for qualifying purchases to earn more rewards.
Other features include 24/7 account monitoring, fee-free BoA ATM usage and the ability to add your debit card to a digital wallet for easier checkout.
Card price: $0
Monthly or annual fee: $0
3. Discover® Cashback Debit
With Cashback Debit, users can earn 1% cash back on up to $3,000 in purchases per month. So, if you make $500 worth of purchases monthly with your debit card, you’ll earn back $5 a month, or $60 a year.
Other features include 24/7 customer service and access to over 60,000 surcharge-free ATMs. Also, if you lose your debit card, Discover will replace it for free.
Card price: $0
Monthly or annual fee: $0
4. Axos Bank CashBack Checking
Axos offers CashBack Checking for customers who want to earn rewards with a debit card. You can earn up to 1% cash back on signature-based purchases (so, something routine like grocery shopping doesn’t count) and earn up to $2,000 cash back per month. However, you’ll also need to maintain a daily balance of $1,500 to earn the 1% cash back.
Other features include reimbursem*nt for over 60,000 ATMs worldwide, and no balance or activity requirements to maintain the account.
Card price: $0
Monthly or annual fee: $0
5. PayPal Business Debit Mastercard®
Once you activate the cash-back program, PayPal Business Debit Mastercard users can get unlimited 1% cash back on qualifying purchases. The cash back is added to your PayPal account each month. Note that business owners face a $1.50 domestic ATM usage fee, and have a daily limit of $3,000 in purchases and $400 in cash withdrawals.
Other features include a free additional card for the account and no liability for unauthorized charges.
Card price: $0
Monthly or annual fee: $0
6. Consumers Credit Union Rewards Checking
CCU offers rewards in the form of annual percentage yield (APY). There are three rewards tiers with varying requirements to earn 3.09% APY, 4.09% APY or even 5.09% APY on account balances up to $10,000. For the first tier, you must make at least 12 debit card purchases that equal $100 or more a month as one of the qualifications, so you’ll need to be organized to reap these rewards.
Other features include over 30,000 surcharge-free ATMs and no minimum balance requirement.
Card price: $0
Monthly or annual fee: $0
7. Empower
Empower is an app and bank account. You can get 1% cash back on the first $1,000 you spend per month with your debit card, earn 1.65% APY on your money and even snag cash back when you refer your friends. You’ll have access to over 25,000 fee-free ATMs and even get reimbursed for one out-of-network ATM use per month. You can fund your account in a number of ways, though it does not support cash or check deposits.
Other features include no account fees or required minimum balances. Accounts are also FDIC-insured up to $250,000.
Card price: $0
Monthly or annual fee: $0
Bonus: Your Local Credit Union
Check out your neighborhood credit union for other reward-card options. Many institutions offer debit card rewards in the form of redeemable points or cash back. Some even allow you to support a local charity or cause if you choose to make a donation when you open an account.
Contact your local credit union online or in person to see what costs and conditions may apply.
Card price: Varies
Monthly or annual fee: Varies
What About Credit Card Rewards?
When it comes to serious rewards, credit cards typically offer better ones — think, a higher percentage of cash back on purchases or larger sign-up cash bonus — and may provide perks such as price-matching and travel protection. My newest card reimbursed me for TSA PreCheck, which wasn’t something I’d otherwise spend money on. But for free? Sign me up.
Fraud protection is generally stronger with credit cards versus debit cards, too. And credit cards can help you buildcredit and improve your credit score.
While you can earn rewards, you should pay off your balance each month to avoid accruing interest. Be mindful of signing up for credit cards simply for the rewards, especially if you’d need to make extraneous purchases to qualify for them, too — 40,000 bonus miles won’t matter much if it will wreak havoc on your budget to earn them.
Are Debit Card Rewards Worth It?
It depends. Like anything, you’ll want to read the fine print and maybe crunch some numbers; make sure any associated fees don’t cancel out your potential rewards, for instance. You’ll want to be organized in case you need to redeem rewards before any deadlines, too.
But if you’re just looking to get started with a rewards card, period, a no- or low-fee debit card may be a good choice for you.
Kathleen Garvin (@itskgarvin) is a writer and editor whose work has appeared in U.S. News, Clark.com and Well Kept Wallet.
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