We’ve all seen the commercials for the Chase cash back debit card that offers up to 3% cash back, but is there a catch to this offer? Well, here’s some important things to consider…
You have to pay an annual fee
Unfortunately, they’re charging an annual fee for this cash back debit card. It will cost you $25.00 per year, per card.
There is a cap on cashback
This debit card has a cap on rewards; a maximum of $500 in cashback can be earned in a year.
Purchases made using the PIN won’t count
In order to get cash back they are requiring the purchases to be rung up without a PIN. That means when paying for a purchase, it will be required to ring it up as a “credit” instead of a “debit” transaction.
Only certain categories earn cash back
Not every purchase made with a Chase cash back debit card will earn a rebate. Only the following categories will qualify: groceries, fast food/coffee, gas, drugstores. That means all other purchases will be earning you zero rewards.
There’s monthly tiered spending to qualify for 3% cash back
The Chase debit card with cash back doesn’t give 3% to everyone. In order to get 3%, the total spending across all purchases and merchants will need to meet a certain tier:
$0.01 to $499.99 per month = 1% cash back in above categories
$500.00 to $999.99 per month = 2% cash back in above categories
$1,000.00 and above per month = 3% cash back in above categories
Not always the same rights as a credit card
This is not specific to the Chase cash back debit card, but rather all debit cards in general, regardless of their issuer. There are certain rights (protected by federal law) that apply to credit cards, but not debit cards. Also something else to keep in mind is that if your debit card number is stolen, that could cause your checking account to be temporarily overdrawn (which in turn might cause your outstanding checks for rent, mortgage, car payment, etc. to bounce).
Should you apply for the Chase cash back debit card?
I think it’s great that they’re bringing rewards to debit cards, but when you think about it, paying an annual fee to only earn 3% on a few categories doesn’t make sense, being that there are free credit cards that offer similar programs. Another big drawback is that you are NOT getting 1% cashback on your other purchases (like most credit cards offer) and that means you would be missing out on a lot of cash back.
You can get a higher 5% cash back from Chase (sponsored)
Instead of the Chase cash back debit card, you should check out their new credit card rewards program. You can get a full 5% cash back and no annual fee – check out our Chase Freedom card review to find out how!
April 2011 update: Chase has discontinued their cash back debit card rewards due to the fee reform laws. My recommendation? Check out the 5% Freedom card!