My understanding is credit card companies make money based on a transaction cost, which presumably is the same for credit/debit. I can't really find information on this, so it might be a faulty assumption (?).

I suspect they make enough money on interest from credit cards to overcome the other perks they offer over debit cards (or the transaction costs are different). Or there are legal obligations for debit vs credit cards. But I really have no idea other than speculation for the answer to:

  • I think this question boils down to "Why are credit cards more popular than debit cards?" (for which see this question). If a credit card and a debit card offer comparable rewards, then the choice between them will be made based on other factors, not related to the rewards.
    – BrenBarn
    Nov 25, 2014 at 19:24
  • @BrenBarn I clarified my question to be more clear how what I am asking is different- thanks!
    – enderland
    Nov 25, 2014 at 19:35

2 Answers 2


A search quickly led to http://www.cardfellow.com/blog/debit-card-credit-card-difference-charges/ which shows the difference in merchant fees charged.

A $200 charge costs $3.50-$3.60, a debit charge, $2.34-$2.39 but a PIN Debit, $1.87.

The debit cards are a full percent less cost to the merchant, so the money collected is less to use for rewards.

(I can't help but wonder how my card gives me 2% cash back, no fee, when I never pay interest.)

  • 1
    I'm unsure of the reliability of the numbers given by cardfellow.com. I was under the impression that merchant fees for reward cards were typically in the 3-4% range, or about $6-$8 on a $200 charge. Which would explain how they can afford to give you 2% cash back. Nov 25, 2014 at 23:35
  • Your card can give you 2% cash back when you never pay interest because you are in the minority in that regard. The perks attract customers, and those customers who carry a balance and pay 15+% provide the profit.
    – Mike E
    Nov 26, 2014 at 16:50
  • JoeTaxpayer: I've recently begun wondering if they give 2%+ cash back because they earn more money off your spending habit data. Any thoughts?
    – user541686
    Jun 1, 2018 at 11:17

Debit cards do not earn the bank any interest from you whereas credit cards do, so they want to give incentive to use credit over debit.

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