Why Don't Big Banks Offer Cash Back Debit Cards?

Swipe a credit card and you might earn 2 or 3 percent back. Swipe a debit card from the same bank and you usually earn nothing. The reason is a 2011 rule called the Durbin amendment, and the exceptions it carved out are where cash back debit cards still live today.

Where card rewards come from

Every time you pay with a card, the merchant gives up a slice of the sale, called interchange, that flows to the bank that issued your card. Credit card interchange typically runs between 1.5 and 2.5 percent. That slice is what pays for your 2 percent cash back and your points.

Debit interchange used to work the same way. Before 2011, big banks commonly offered debit rewards programs funded by interchange averaging around 1 percent per transaction.

Why don't debit cards have rewards? The Durbin amendment changed the math

The Durbin amendment, part of the Dodd-Frank reform law, directed the Federal Reserve to cap debit interchange for large issuers. Since October 2011, banks with $10 billion or more in assets can generally collect only about 21 cents plus 0.05 percent of the transaction, plus a small fraud adjustment. On a $50 purchase, that is roughly 24 cents, generally less than half of what an uncapped issuer might earn.

The exact cap may not last: the Fed has proposed lowering it to about 14.4 cents, and a federal court vacated the rule in 2025, a decision that is on hold while the Fed appeals. For now, the 21-cent standard still applies.

There is no room in 24 cents to fund 1 or 2 percent cash back. Big banks dropped their debit rewards within months, and rewards migrated to credit cards, where interchange stayed unregulated. That is a big reason your bank keeps steering you to its credit card.

The loophole: banks under $10 billion

Congress exempted small institutions. Banks and credit unions under $10 billion in assets can still earn uncapped debit interchange, often two to three times the capped rate. That interchange can fund rewards.

That gap is a big reason so many fintechs exist the way they do. Chime, Upgrade, OnePay, and most other app-based banking products hold your money at small partner banks. Part of the reason is regulatory simplicity, but a big part is Durbin: a fintech riding on a partner bank under $10 billion earns a multiple of the interchange a megabank can, and some of them share that revenue with you as cash back.

Cash back debit cards worth knowing in 2026

Rates, caps, and categories change often. Check current terms before opening any account.

Should you chase debit rewards at all?

Varo's 6 percent applies only to activated offers at partner merchants. Upgrade's 2 percent stops at $500 a year. A no-annual-fee 2 percent credit card has no such cap, builds credit history, and carries stronger fraud protections. If you pay your balance in full every month, a flat-rate credit card almost always earns more.

Cash back debit makes the most sense if you prefer not to use credit at all, are rebuilding credit, or want rewards on spending that credit cards handle poorly. It also stacks: nothing stops you from holding a high-yield account for savings and a rewards debit for everyday spending, and collecting a signup bonus on the way in.

Two accounts we track and recommend that put the small-bank exemption to work:

The Durbin amendment created one of the odder splits in American banking: rewards live on credit cards at big banks and on debit cards at small ones. If a debit card fits how you spend, pick one with rewards funded by the exemption, and grab the signup bonus while you are at it. Browse current bank bonuses on our banks page, and use the Bank Bonus ROI Calculator to compare any offer against simply parking cash in a high-yield account.

This article is for general education, not financial advice. Interchange rules summarized here are simplified; rewards programs change their terms frequently.