What is a cash back debit card?

In this credit-crazy world, it often seems like everyone is getting multiple credit cards in order to maximize rewards and accumulate points. In fact, according to a 2019 study by ElitePersonalFinance, an average American holds four different credit cards. For young adults and those with damaged credit, accessing high-quality credit cards can be problematic and difficult, and these perks grow out of reach. Fortunately, modern banking solutions have allowed banks to provide very competitive benefits to accompany debit cards. This means that you can receive cash back and other rewards without having to deal with the hassles of credit and borrowing. 

How is a debit card different from a credit card?

Unlike credit cards, debit cards have to be connected to a bank account and are used to make purchases using money deposited in the account. You cannot borrow any money and are bound by the accumulated amount in your account. This makes debit cards much safer to use than credit cards, however, they do not help in building credit and do not carry lucrative rewards. Since banks profit off APRs and interest, they can afford to reward customers with extensive cash back and benefits. With the low margins that debit cards bring to banks, do not expect high reward rates. 

What are examples of cash back debit cards?

In an intensely competitive market, card issuers are offering very impressive benefits to debit cardholders. Innovative firms issue cash back debit cards like the Revolut card (variable cash back), Oxygen Visa card (variable cash back), Level card (1% cash back) and Point card (variable cash back). All four are debit cards that offer cash back rewards. Although the cash back rates are significantly lower than comparable credit cards, you never have to worry about interest or penalty fees. 

Should you get a cash back debit card?

If you have a streamlined banking setup with a single bank, it could be very disruptive to get a new debit card. In addition, if you already have a debit card, it would not make much sense to get another one unless you are willing to go through the process. However, if you are new to retail banking products and want a card that will eliminate an possibility of overspending while giving you rewards, cash back debit cards might be for you.