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Debit cards aren't typically known for their rewards, but some will give you points or cash back when you make eligible purchases. These debit card rewards programs can be an easy way to earn quick cash, but it's a good idea to understand the rules for the program before signing up. Here's how debit card rewards work.
What Is a Rewards Debit Card?
A rewards debit card is a card that's linked to your checking account and allows you to earn rewards based on your purchases. Depending on the card, you may earn points or miles that can be redeemed or a percentage of your eligible purchases as cash back. The financial institution sets rules on redemption options, eligible transactions, rewards caps and other account details.
Learn more: How to Earn Cash Back With a Debit Card
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Which Debit Card Transactions Earn Rewards?
Review your checking account's terms to see which purchases qualify. Some programs reward only signature-based transactions, which generally means you choose "credit" at checkout and provide a signature. Other programs reward PIN-based purchases, where you type in a code for security verification at checkout.
Which Debit Card Transactions Do Not Earn Rewards?
Debit card rewards programs usually won't provide rewards on certain transactions. These often include:
- ATM transactions
- ACH and bank transfers
- Peer-to-peer (P2P) app money transfers
- Returns and disputed or unauthorized purchases
- Illegal purchases
- Lottery ticket purchases and betting transactions
- Cash-like transactions such as currency purchases, money orders, prepaid debit card and gift card purchases, and point-of-sale cash back
What Types of Rewards Can Your Debit Card Earn?
Each program is different, but many come with the following types of rewards when you use the debit card linked to your checking account.
- Cash back: You may earn a percentage of the amount you spend, such as 1%, or the bank may pay you a flat amount, such as 5 cents, for each debit card transaction.
- Points or miles: Some programs give you points or airline miles for every dollar you spend on each qualifying debit card purchase. You may be able to redeem those points for cash, travel purchases, gift cards and more.
- Discounts: You may also have the option to log in to your account online and choose from a menu of available discounts, such as 15% off when using your debit card with a select retailer.
At the end of the applicable rewards period—usually monthly or annually—your bank will add up all of your eligible rewards. Cash is typically deposited into your checking account, while you may need to spend your points or miles in a special shopping portal.
Pros and Cons of Rewards Debit Cards
These debit cards allow you to earn rewards on everyday purchases without borrowing money or going through a credit check. But they also come with some drawbacks, such as minimum requirements for earning those rewards. Here are some pros and cons to consider:
Pros
Rewards on everyday purchases: When you use your debit card for eligible purchases, you earn points or cash back—typically on purchases you were planning to make either way.
No credit card balance: Purchases come out of your checking account, so you don't have a credit card bill to pay or interest charges on those purchases.
No credit check in many cases: You generally don't need to pass a credit check when opening a rewards checking account. However, the bank or credit union may run a ChexSystems report, so negative banking history could still be an issue.
Cons
Minimum requirements: You may need to meet requirements, such as receiving direct deposit or maintaining a minimum balance, to earn the rewards.
Account fees: Some rewards debit cards charge various fees, such as monthly fees and ATM fees, which offset what you earn.
Reward limitations: The debit card may cap your rewards or offer them only on purchases in certain categories.
Potentially lower rewards: Cash back rates on debit cards may be less generous than offerings on rewards credit cards.
Learn more: What Is a Minimum Balance Requirement?
Rewards Debit Cards vs. Rewards Credit Cards
| Rewards Debit Cards | Rewards Credit Cards | |
|---|---|---|
| Availability | Offered with some checking accounts | Requires a credit application and approval |
| Spending limits | Generally limited to money available in your checking account | Limited by your available credit |
| Rewards rates | Typically lower | Typically higher |
| Credit impact | Generally none | Payment history and balances affect your credit |
| Debt risk | Low; overdrafts are possible | Carrying a balance can lead to debt and interest charges |
| Best for | Earning rewards on everyday purchases without borrowing | Earning more rewards if you can pay the balance in full each month |
Are Rewards Debit Cards Worth It?
A rewards debit card may be worthwhile if you can't qualify for a rewards credit card or prefer not to use credit. A rewards debit card allows you to earn cash back or points—often on purchases you were going to make anyway—without borrowing money.
Before opening a new checking account or requesting the linked debit card, consider how often you'll use the card and whether your usual purchases qualify for rewards. Check the program's requirements and fees, too. If you rarely use your debit card or the fees would outweigh what you earn, the rewards may not be worth it.
How to Choose a Rewards Debit Card
When you're researching rewards debit cards, here are some tips on choosing one that works for you:
- Compare rewards. Decide whether you'd rather earn cash back, points or airline miles, and review your redemption options.
- Review account fees. Look for fees and when they may apply. These take away from any rewards you earn, so it's best to avoid them when possible.
- Look closely at the rules. Make sure you can meet requirements to earn the rewards, such as maintaining a minimum balance or using the card a certain number of times each month. Also look for caps on the rewards you can earn.
Frequently Asked Questions
Why Are Debit Card Rewards Less Common Than Credit Card Rewards?
Card issuers often fund rewards programs with revenue earned through interchange fees. Federal rules cap those fees for many debit cards issued by large banks, but the cap doesn't apply to credit cards. The Consumer Financial Protection Bureau says this may be one reason rewards debit cards are less common.
Do Rewards Debit Cards Affect Your Credit Score?
Using a rewards debit card generally won't affect your credit score. The funds for your purchases come out of your checking account, so you're not borrowing money. These transactions aren't reported as credit activity. But if you leave an overdraft or bank fee unpaid and the debt is sent to collections, it could appear on your credit report and hurt your score.
How Do You Earn the Best Debit Card Rewards?
To earn the best debit card rewards, compare debit cards that reward the purchases you make most often. Check which transactions qualify, how much you can earn and whether you need to meet requirements to get the rewards.
The Bottom Line
Debit card rewards programs offer a way to earn cash back or points on the purchases you make with the card. The bank may set requirements to earn the rewards, limits on how much you can earn and fees on the account itself. So you'll need to consider whether the rewards debit card is right for you.
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