Cash Back Debit Cards: You Don’t Need Credit Cards for Cash Back Rewards

Last year Chase launched a new program on their Freedom credit card called Chase Offers. They touted these offers as a new way to save, in addition to the quarterly 5% cash back you receive at certain types of stores. They raved that these offers were selected just for me and I should activate them online or via the app to start earning more cash back.

But when I went to review the offers they gave, something seemed off. Two things actually. First, the offers didn’t really seem tailored to me as the email blast claimed. They were pretty generic and mostly for stores where I’d never used my card. More importantly, they seemed extremely familiar. In fact, they seemed to be almost identical to the cash back offers I use through my credit union with my debit card.

So, I went to my online bank account and compared the Chase Offers to those available on my debit card. Sure enough, they were identical. In fact, my debit card included a few offers that Chase didn’t. But it was clear that both companies were pulling these cash back offers from the same collective pool. That made the new cash back offer program from Chase Freedom seem a lot less special. In fact, it convinced me to stick to using Chase for the 5% cash back deals and stick to using my debit card when it came to these offers.

How to get cash back without using a credit card

These days, most major financial institutions and even some small ones like local credit unions are working to incentivize debit cards. It’s the same logic as credit card companies offering credit card reward programs. If they sweeten the deal with offers like cash back, you’re more likely to use that particular card.

This means that there are tons of cash back debit cards in the market today.

How cash back debit cards work

1. First, check with your existing bank or credit union to see if they offer a cash back rewards program.
2. If not, go shop around with local financial institutions to find a bank or credit union that offers a cash back reward program on their debit cards.
3. Then go online or through your app to browse the current offers available.
4. Each offer will have an expiration date; you must use the offer by that date in order to qualify for cash back.
5. Activate all the offers that interest you. You must activate them prior to making a purchase at that retailer!
6. Use the offer before the expiration date.
7. Then your financial institution credits the cash back automatically directly to your account.

The time it takes to receive your cash back depends on the financial institution. Some promise within 7-10 business days while others do cash back deposits monthly.

What types of offers do cash back debit cards provide

The offers come from brick and mortar stores, as well as online retailers. Here are some common offers I see come up regularly:

• Online retailers, such as 1-800-FLOWERS
• Restaurants, like Starbucks and Anthony’s Coal Fired Pizza
• Subscription boxes, including Stitch Fix, Bark Box, and Blue Apron
• Travel sites, like Airbnb
• Home services, like ADT
• Car services, such as Jiffy Lube and Midas

This means you can get cash back on a variety of monthly expenses and one-off expenses like travel and flowers for special occasions. If you use subscription box delivery services, this is a must-have for saving money on those services, which can be pricey.

Why cash back debit cards are better for your budget

Using your debit card for cash back rewards gives you all the cost-saving benefits without the interest charges. Average credit card APR is currently over 17% and AAPR for reward credit cards tends to be over 20%. With APR that high, you offset any rewards you earn quickly if you don’t pay off your balances in full every month. Accrued monthly interest charges will outstrip the cash back you earn within about 2-3 billing cycles, depending on the APR on your credit card.

Using a cash back debit card means you don’t have any potentially for offsetting the rewards with interest added. You get cost savings without added costs.

Is there still a place for cash back credit card rewards?

Absolutely. Although these new Chase Offers are identical to the ones offered by my debit card, the Freedom card has two other reward programs:

1. Their regular Ultimate Rewards program, that offers quarterly 5% cash back at specific types of stores.
2. The Chase Bonus Points program, that gives you extra cash back for using your card to shop online through certain vendors. These offers range from 2% additional cash back up to 10%, depending on the retailer.

These are special reward programs that I can’t get through my debit card. So, there’s not a no-cost substitute for these cash back rewards.

And as long as you have control over your credit card debt, credit card cash back can be extremely invaluable. You can use the cash back you earn to pay for travel offers, redeem them for gift cards or just deposit the money into your bank account. Just be sure to redeem the rewards, since studies show many credit users never bother redeeming their rewards.

Ideally, if you use a cash back rewards credit card, you want to maintain a zero net balance on the card. This means that you pay off all charges you make each billing cycle. That way, you can use your credit card interest free. If you start and end every billing cycle with a zero balance, interest charges never apply. It’s the best way to use cash back credit cards because you don’t offset rewards with interest added.