The phrase “debit card rewards” has acquired an air of nostalgia over the last few years, conjuring up visions of the days when consumers could earn cash back or rewards points without the stress and angst often associated with using a credit card as your primary means of purchase. But can those glory days return? Well, the answer is “No”, “Sort of”, and “Yes”. Not satisfied? I don’t blame you, that’s not a very helpful answer, but let me explain…
NO, Big Banks Can’t Offer Traditional Rewards Programs (but don’t lose hope, keep reading!)
Debit card rewards programs in their traditional sense are no longer a cost effective means of incenting customers to open a checking account for banks with assets greater than $10 billion thanks to regulation enacted post-financial crisis (looking at you Durbin Amendment). In a nutshell, banks were greedy, small businesses were suffering, the federal government intervened and debit card rewards programs were the collateral damage. Bummer. Note: we got into the math on why rewards are no longer cost effective in a different post.
Small Banks and Credit Unions SORT OF Offer Debit Card Rewards
The Durbin Amendment didn’t affect smaller banks and credit unions and they’ve been slowly coming around. They’re offering debit card rewards programs to try to lure customers away from the big banks. But there is a catch – these programs often come with restrictions and limits to your rewards. For example, roughly 65% of debit card rewards programs only apply to signature-based transactions and of the remaining 35%, nearly all pay less in rewards for PIN transactions.
On top of the restrictions, many debit card rewards programs put a cap on rewards you can earn in a given month. An example comes from one of the only big players left offering debit card rewards: Discover’s Cashback Checking card. Although the program returns $0.10 cash back on every debit card purchase you make – you’re limited to $10 cash back per month.
The takeaway? To find debit card rewards you may have to give up your big national bank for local player and persevere through restrictions. But as a ‘reward’ for your sacrifice you can get cashback, travel and even improve interest rates on your accounts depending on your bank of choice. Certainly better than nothing!
YES, A New (Proxy) Debit Card Rewards Program is Nearly Here and You Can Sign-Up Now!
Okay, you got us, it’s a shameless plug and we’re not quite a rewards program, but EarnSmart is a savings tool that links directly to your current bank issued debit (or credit) card. This means you can get all the debit card rewards you can find from your bank (looking at you Discover) and layer on additional savings with EarnSmart while you “earn” your way towards amazing deals you won’t find anywhere else! Want us to waive your annual fee for the full first year on the program? Just enter your name and email on our home page and we’ll also notify you when we launch so you can be the first to start earning new rewards! (We promise not to spam in the meantime)
Okay, shameless plug is over. Sorry to leave you in suspense, but we’ll be back with more information on the EarnSmart Deals program over the next couple months before we go live in March. Have a question in the meantime? Want to leave a comment? We want to hear from you at [email protected]!