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Most debit cards don't offer rewards, but a few banks provide cash back rewards programs on certain debit cards. The terms can vary, with some offering cash back on every purchase, while others limit your rewards-earning power to select merchants.
If you prefer to use debit instead of a credit card but don't want to miss out on cash back rewards opportunities, read on to learn about how cash back debit cards work and how to pick the right card for you.
How Do Cash Back Debit Cards Work?
For the most part, debit card cash back rewards programs work similarly to cash back credit card programs. When you make an eligible purchase, you'll earn a rewards rate based on the card's applicable rewards rate.
For many cards and purchases, that means a flat 1% back. Other cards may earn you a much higher rate, but only with select retailers. Depending on how you spend your money, one card may offer more value than others.
That said, there are some limitations to keep in mind:
- Monthly caps: Some cards may limit how much you can earn each month by setting a cap on spending that earns rewards.
- Account requirements: Some cash back debit cards may require you to maintain a minimum balance to earn rewards.
- Activation: If a debit card offers cash back only with select merchants, you may need to activate those offers to earn the rewards.
As you compare your options, make sure you understand all the terms for earning cash back rewards, and consider potential limitations before you make a decision.
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How to Earn Rewards With a Debit Card
The process for earning cash back rewards with a debit card can vary depending on the bank that offers the account.
You can expect to only earn rewards on purchases made with your debit card—peer-to-peer transfers, ATM withdrawals and cash back from the cashier typically don't qualify. However, some banks may only offer rewards on purchases with certain merchants.
Additionally, some banks may place a cap on your monthly rewards earnings. Others may exclude certain spending categories altogether.
Before you get started, read the rewards terms and conditions to ensure you understand how the program works.
Are Cash Back Debit Cards Worth It?
If you're considering a cash back debit card instead of a rewards credit card, it's important to understand the main differences. Here are some factors to keep in mind:
- Rewards rates: Cash back credit cards typically offer better rewards rates compared to rewards debit cards. You may also enjoy a welcome bonus as a new credit card holder.
- Other perks: Cash back credit cards may also offer other benefits, such as introductory 0% APR promotions, flexible redemption options and perks with certain merchants. With a cash back debit card, you may enjoy ATM fee reimbursements, reduced fees and other benefits.
- Credit score: There are cash back credit cards available to borrowers across the credit spectrum, but the best typically require good credit or better. However, you can use a cash back credit card to build credit with responsible use. In contrast, debit cards don't require a credit check when you open an account, but they also can't help you build credit.
- Fraud protection: Both credit and debit cards offer fraud protection in the event that someone steals your card information. However, credit card issuers typically offer more protection than banks. Additionally, if someone does use your card, you'd only have to worry about them draining your checking account with a debit card.
- Interest charges: If you pay your credit card bill on time and in full every month, you don't have to worry about interest charges. However, carrying a balance can be expensive. On the flip side, cash back debit cards never charge interest.
As you consider both the pros and cons of each option, you'll have an easier time determining which one is the better option for you.
Check Your Credit if Applying for a Credit Card
You typically don't have to worry about a credit check when opening a checking account. But if you're thinking of applying for a cash back credit card, check your credit score before you do so. With Experian, you can be paired with credit cards matched to your credit profile.
The best cash back credit cards tend to require a FICO® Score☉ of 670 or higher. Meeting that threshold doesn't guarantee approval, though. So if you're right at that level or below it, consider working on improving your credit before you apply. In the meantime, you can still earn cash back through a debit card.