Cash Back Debit Card Rewards In 2013?

Posted by CreditCardGuru

MasterCard debit cardWouldn’t it be great to have a cash back debit card? In fact, that is the sole reason many consumers pay with credit cards – not because they need to carry a balance, but because they want the cash back.

So if you are one of these types of spenders, the idea of debit card rewards probably sounds like a good idea to you, right? Unfortunately, it’s not quite that simple…

November 15, 2013 update: Bad news!

Regretfully the one remaining debit offer on the market (from Perkstreet) that had cash back has been discontinued. Perkstreet’s website has been taken down and replaced with this website:

“PerkStreet Financial will has closed permanently and ceased all business operations on September 26, 2013. There were the last debit card with cash rewards on the market.”

Right now here are the two best alternatives – one is a credit card (which obviously isn’t debit, but might be worth considering for rewards) and the other is a prepaid card:

Why aren’t debit cards with cash back more common?

Let’s say you are paying for a purchase with your Visa or MasterCard debit card. When you swipe the card, it will ask you if you’d like to process it as debit or credit. You can choose the “credit” option and process it as such. It won’t make any difference on your end, but it makes a big difference to the store.

You see, the transaction fees on these two types of payment processing methods are drastically different:

  • On a “credit” transaction (whether that’s processed using your credit or debit card) the transaction fee typically runs anywhere from 1.7% to 3% of the transaction amount, plus a fee of anywhere from 17 to 33 cents, on average.
  • On a “debit” transaction (which can only be done using a debit card) is extremely cheap in comparison – the bank only earns a matter of pennies due to the Durbin Amendment which went into effect during the fall of 2011. For example, a $38 debit purchase (which the Fed estimates to be the average size) will cost 24 cents to process. That’s only about 6/10th of 1% and ultimately, the bank only will get a fraction of that since Visa/MasterCard and the processing company get a cut from the fees, too.

You can clearly see why a cash back debit card is almost impossible to find these days! Even if the bank offered you just 1% cash back, that would probably be much more than the fees they are collecting for the transaction.

This is why you it’s rare to find any kind of debit card with rewards, and when you do come across one, run the numbers and calculate how much their points are really worth. You will discover the rewards end up being no more than 1/10 to 1/5 of a percentage point… a 0.1% to 0.2% rebate.

With even the most basic credit cards nowadays offering 1% back on virtually all transactions, plus higher tiered rewards for certain categories, you can see it’s hard for these two types of cards to compete when it comes to rewards.

Perkstreet (update – this has been discontinued)

Everything below is now outdated. I’m leaving up the review of it for historical reference only.

This is why you cannot find any decent cash back debit cards on the market from the big banks, nor will you find any in the future as long as the processing fees work this way.

But even though Chase, Bank of America, Citi, and the other big banks stopped their debit cash back programs, it doesn’t mean you have to be left high and dry. Because of their low overhead, some online-only banks can still offer you debit card rewards.

By far the most generous among them is PerkStreet. The company was launched in 2009 and has been going strong ever since with their generous cash rebate program.

perkstreet rewards program

In a nutshell, here’s how Perkstreet works:

  • Unlimited 1% cash back on non-PIN debit card purchases
  • 2% cash back online at places like Amazon, Target.com, iTunes, Apple.com and more.¬†Online purchase bonus perks limited to $2,500 in spend every calendar year.
  • 2% cash back in-store at Walmart, Target, Best Buy, and Apple when you have a balance of $5,000 or more in your account.¬†stores. Offline purchase bonus perks limited to $2,500 in spend every calendar year.
  • Up to 25% cash back, and sometimes more, on PowerPerks deals which are special in-store and/or online deals that are sent to your inbox every week.
  • You don’t have to switch banks if you don’t want to. Simply link your Perkstreet account to your current bank’s checking account and transfer money for free when you wish to do so.
  • Deposits are FDIC insured up to $250,000.

Last but not least, there’s always the option of just sticking with credit cards to earn rewards. However I know this doesn’t work for everyone…

Even if debt isn’t a consequence, credit does lead to overspending for some people. And earning 1-5% cash back is stupid and pointless if that piece of plastic is causing you to spend more. Or, some people just prefer debit because of the ease of use with tracking their cash (both incoming and outgoing) from a single account – their bank account.

With that said, if you can manage your spending responsibly, you may want to check out the top cash back credit card deals on the market to see if any of them are right for you.


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Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

18 comments... read them below or add your own

  1. Brian August 12, 2013 at 11:24AM

    Unfortunately, as of 8-12-13 Perkstreet is bankrupt and will no longer be doing business. http://www.perkstreet.com/explanation.aspx
    It was good while it lasted, I received several hundred dollars in perks.

  2. DLSmith29 August 4, 2013 at 2:33PM

    Be wary of PerkStreet: if you do not transact copiously enough (Read “use their account as an emergency fund, rather than a spending account.”) for their advantageous liking, they will begin cannibalizing your balance to the tune of several dollars per month. They emptied my account without as much as a single mail message of their practice or intent and then denied me the gratuity of opening a new account. I can’t find enough outlets to express my displeasure.

  3. jojo jin July 21, 2013 at 9:08PM

    This card is not as good as you think! 1% on no pin “credit” purchases !! I can get a better benefit by using credit card if I am going to put “credit” purchases anyway

  4. Joe March 19, 2013 at 1:12PM

    I just found plink.com as an add on to Perkstreet for earning points. Would you know of any other websites similar to plink.com?

    • Nick Denton April 4, 2013 at 10:03AM

      There are a number of cash back malls and apps you can find.

      Very few card link services for the “real world”.

      Most of what I’ve found have been almost exclusively on the West Coast or only in major cities. Plink stands alone at the moment. I hope to see more in the future but that’s what we’ve got for now.

  5. John September 30, 2012 at 5:53PM

    The USAA info is NO LONGER ACCURATE. I am shopping around because they had rewards but then dropped them with practically no notice.

    BTW The banks still get all those transaction charges, they just don’t want you to get any of the $ for YOUR purchases!

  6. Dman September 10, 2012 at 9:38PM

    The PayPal debit card is awesome. You can link it to your primary checking account. Get 1% back on everything. I average getting back about thirty bucks a month.

    • Rel October 19, 2013 at 10:27AM

      Yes the PayPal debit card IS awesome! I get a good chunk back every month too! I would totally recommend to everybody and they don’t have any fees for it either!

  7. Rachel March 8, 2012 at 6:10AM

    Kyle, I agree that it’s near-impossible to get 2% back with Perkstreet now, but you still get a solid 1% back on all non-pin purchases. I’m one of the few that carried a $5k balance and I’m super annoyed they changed their policy. I found this page while trying to find a new cash-back debit card, but I think their bank account might still be the best :-/

  8. Kyle March 5, 2012 at 9:31AM

    Perkstreet changed their policy and now has many gimmicks to get 2%. Stay away.

  9. Jeremy October 1, 2011 at 9:14AM

    I remember back in the day BofA use to offer a debit card that received ok rewards but you needed to press credit instead of debit to receive the full advantage. Sounded like too much of a pain, just use a credit card. But now it’s no longer avail anyway.

  10. Darrel Steiner July 21, 2011 at 2:04AM

    Its best to use your charge card and pay it off in full every month. That’s how you will get the best rewards.

  11. Cindy J. July 9, 2011 at 11:30AM

    My Bank of America ATM card use to have rewards but they were real crappy. I think it worked out to be something like 1/20th of 1%

    Definitely NOT worth it!

  12. Stanley July 8, 2011 at 11:43AM

    You need to get at least 1% cashback for me to bother using any card.

  13. LR July 6, 2011 at 2:49PM

    I stopped using my ATM after I had a fraud nightmare with it. I’ve stuck with my Cap One Mastercard ever since.

  14. Pauline July 5, 2011 at 2:22PM

    I know someone that had their debit used by a grandson after the grandfather died for 3 months fraudulently and the bank refused to credit them because it wasn’t reported or detected within 48 hours.

  15. CreditCardGuru January 9, 2011 at 7:48PM

    Sorry John, but you’re wrong. Here’s the truth about the Chase cash back debit card

  16. John January 8, 2011 at 10:26PM

    Well I hate to break it to the guru, but there are some excellent cash back debit cards.
    Chase does one with 3% cash back on non pin transactions.
    Perkstreet debit card has a card that offers 1% to 2% cash back and then 5% on selected merchants.
    Paypal debit card offers a 1% flat on all transactions whatsoever as long as they are non pin.

    This genre of cash back on debit cards is growing and growing. Sorry guru!

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