Debit Card Rewards Programs: Everything You Need to Know

Credit card rewards are the topic of many financial conversations, from earning cash back on your groceries to using points and miles for a business-class flight around the world. Debit cards, traditionally, don’t have these types of rewards. However, they are quickly becoming more than just a way to spend funds in your checking account. Some of the best-overlooked debit cards can even help you build credit. Keep reading for everything you need to know about debit card rewards programs.

What Are Debit Card Rewards?

Banks, credit unions, and other financial institutions offer debit card rewards programs to encourage you to use their product by providing a reward when you make a purchase using your card or keep a balance in your checking or savings account. These rewards can come in the form of cash back, points, or even cryptocurrency. Debit card rewards are a fantastic way to offset costs during the holidays or to earn interest on money sitting in your bank account. If you’re already using your debit card, you should be getting something in return.

How do Debit Card Rewards Differ from Credit Card Reward Programs?

There are a few main differences between debit and credit card rewards programs. When you use a credit card to make a purchase, you’re essentially borrowing money from the credit card issuer. You then pay that money back, in part or in full, when you pay your monthly statement. Credit cards are excellent tools for those working to build their credit or those who need to pay a purchase off over time. Debit card rewards typically have more restrictions and regulations, like minimum account balances, to earn rewards or interest on your balance.

What Costs Are Associated With Debit Rewards?

The best debit card rewards programs will charge little to no fees to use the card. Before opening a new debit card, here are a few things to look at:

• Monthly maintenance fees: A charge for having a bank account with whatever institution. This is sometimes waived if you keep a certain amount in your bank account.
• The minimum amount to open: The amount you need to deposit into a new account.
• The minimum balance: The amount you need to keep in your account to avoid further fees.
• Overdraft fees: Charges for making a payment or withdrawal that exceeds the amount available in your account.
• Annual fees: A fee you pay to the card issuer each year to use the card.
• ATM fee reimbursement: Some cards will reimburse any fees incurred for withdrawing cash from an ATM.
• Foreign transaction fees: Fees incurred for using your card outside the U.S.

There are plenty of costs that can be associated with debit card rewards, so it’s essential to do your research before you open an account to avoid paying more than necessary. Many of these costs are similar to standard checking account fees.

How Do Debit Rewards Work?

Sign-up Bonuses

Like credit cards, most welcome offers or sign-up bonuses require new cardholders to do something within a specified window. While credit cards typically require you to spend a certain amount, debit cards and checking accounts will require you to deposit a certain amount. These bonuses won’t be thousands of dollars but typically range from $100 to  $300 and require a direct deposit totaling $500 or more into your account. It’s important to thoroughly read the terms and conditions to know exactly what you need to do to earn your bonus.

Annual Percentage Yield (APY) Bonuses

In simple terms, APY is the interest you earn from the money in your account. According to a recent survey by Bankrate, the national average APY for savings accounts is 0.57%. However, premium debit cards like the M1 Spend Visa Debit Card, paired with the M1 Plus membership, earn a whopping 3.30% APY – more than five times the national average on savings accounts. No matter the APY, the more you keep in your account, the more you can earn.

Let’s say you open an account with a 5.00% APY and make an initial deposit of $1,000. At the end of the year, you’d have $1,050 – making $50 in interest. If you open an account with a 3.00% APR but make an initial deposit of $5,000, you’ll end the year with $5,150 – making $150 in interest. It’s important to keep your balance high while balancing the need to earn rewards on purchases.

Rewards Structures

The rewards structure for debit card rewards programs will be similar to credit cards. Some cards will earn a certain number of points per dollar spent on purchases. Some purchases might earn more points per dollar than other purchases. 

Instead of points, your debit card might give you cash back on your purchases, often 1% to 3% back on specific categories of purchases – think grocery stores, gas stations, restaurants, and select merchants. Sometimes, there are limits to how much cash back you can earn in any given month or quarter. Other times, you can earn as much as you can spend. This is yet another reason why it’s so important to compare the best debit and prepaid cards. 

If you want to use cryptocurrency for your daily purchases, you can also get debit cards that use and earn crypto. Points and cash back are certainly more popular for debit cards, but it’s still worth mentioning that the option for crypto debit cards exists.

Are Reward Programs Worth It?

Debit card reward programs can undoubtedly be worth it if you take full advantage of a card’s opportunities. The most important thing is understanding how the card works. You need to limit the amount you’re paying in fees and maximize your earnings. Although they take some research and might charge minor fees, the benefits can outweigh the costs for most people.

Examples Of Rewards Debit Cards

Ready to start earning rewards with your next card? Discover the best debit card options that offer amazing rewards and benefits to fit your needs – whether you’re an entertainment fan, a crypto enthusiast, or even a parent looking to teach your teens financial responsibility.

There are debit cards tied to wealth management or investing platforms, like the Albert Mastercard®, which allows you to earn up to 20% cash back on select merchant offers. Or, there are debit cards like the Walmart MoneyCard that are linked to specific merchants. In this case, Walmart. If you spend a lot at the superstore, you’ll be glad to see that the card earns 3% cash back at Walmart.com, 2% at Walmart fuel stations, and 1% in-store. Similarly, Disney fanatics can get the Disney® Visa® Debit Card to earn up to 10% cash back on select purchases at Disney.com and the Disney store.

For parents who want to teach their children healthy financial habits, there are cards like the Current Debit Visa Card, which gives you complete control, all while earning up to 4.00% APY and up to 7 points per dollar on purchases. Or, if you’re an immigrant trying to build credit before getting a credit card, the Zolve Azpire Credit Builder Card earns unlimited 1% cash back and reports to all three major credit bureaus.

As you can see, there are rewards debit cards for just about anyone. Whether you want to focus your earnings on a specific brand or you’re new to credit and want to ease in with a checking account, there are tons of options on the market. No one wants to leave money on the table, so switching your primary checking account to one that earns a high APY and cash back on purchases is a no-brainer.

Related Article: The Ultimate Guide to Debit Cards

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