However, there may also be some minor downsides to these programs that you should understand before you swipe. Read on for the whole story on debit card rewards, and a list of programs that deserve your attention.
Every time you make a purchase with a debit card, the retailer has to pay a fee to the bank that issued your debit card. Before 2010, these fees were largely unregulated, and debit card reward programs were abundant. Then along came the Dodd-Frank Wall Street Reform and Consumer Protection Act, which put a cap on the fees banks could charge via the actâs Durbin Amendment.
This was good for merchants, as they payed lower fees, but it also meant banks made less money from debit card transactions. As a result, many banks got rid of their debit card rewards programs, and while some programs are still around, theyâre not nearly as commonplace as they once were.
Debit card rewards programs may be an easy way to earn cash back and other perks, but the rewards arenât always as rewarding as they seem at first glance. Letâs take a look at the pros and cons:
While not as abundant as they once were, there are some solid programs still standing that are worth looking at.
Bank of America customers can participate in the BankAmeriDeals program, which provides cash back on deals from a variety of retailers, including hotels, restaurants and other merchants. You activate your deals online, then earn cash back (typically 10% to 15% of what you spend) when you use your BofA debit card or credit card.
This no-fee checking account from Discover allows you to earn 1% cash back on up to $3,000 in debit card purchases each month. That means you can earn up to $360 a year just by shopping as you normally would.
This oneâs for devoted Disney fans. You donât earn rewards with the Chase Disney Visa Debit card, but you are rewarded with shopping, entertainment and vacation perks. For example, you save 10% when shopping at Disney.com, and when you visit the parks or take a Disney cruise, cardholders are privy to special savings on dining and souvenirs and get access to special character events.
This prepaid debit card from American Express rewards you with 1% cash back on all of your purchases. There are no fees, no minimum balance and no limit as to how much you can earn.
Formerly known as Bank of Internet USA, Axos Bank offers a Cash Back Checking account with up to 1% cash back on all signature-based purchases. There are no monthly fees nor minimum balance requirements; however, you will earn less (0.50%) if your balance falls below $1,500.
For those who like to travel, this SunTrust Delta SkyMiles World Debit Card may give you wings. You get 5,000 miles for your first purchase, then 1 mile for every $2 spent, up to 4,000 miles each month. Your miles never expire, and they can be used for travel and travel-related things, like seat upgrades and membership to the Delta Sky Club.
This bank may have some quirky advertising, but it also offers a pretty serious rewards checking account. You need $500 to open an account, but once you do, you earn 3.00% on up to $10,000 (Note: This rate is subject to change). Any amount you spend over that, you earn 0.50%. Youâre required to make at least 10 transactions each month to reap the rewards and need to open the account with at least $500, but there are no monthly service fees and no monthly minimum to maintain it.
This Free Rewards Checking Account from Consumers Credit Union offers three levels of rewards, ranging from 3.09% to 5.09% in interest on balances up to $10,000, depending on which requirements you meet.
To qualify for the lowest tier of rewards, you must make 12 debit card transactions each month that add up to at least $100, and at least $500 in direct deposits or ACH credits must post to your account each month. Once your balance surpasses $10,000, the interest for all tiers drops to 5.09% for balances between $10,000.01 and $25,000 and to 0.10% for balances above that. There are no maintenance fees nor minimum balances required.
If you qualify for a solid debit card rewards program, thereâs usually no harm in enrolling, and you just might earn some great rewards along the way. But keep in mind that the rewards may not always be all that rewarding, and patience is required.