How to get 20% cash back using a debit card

Top 8 reasons why people think credit cards are better than debit cards (per Kamel’s Breaking Free from Broke)

1. “The Perfect Spender”- people who say they pay off their credit card perfectly every single month and never pay interest.
2. “The Rewards Redeemer”- people who use credit cards for the rewards points and miles benefits.
3. “The Fraud Protector”- people who believe credit cards are safer than debit cards due to their fraud protection.
4. “The World Traveler”- people who believe they need a credit card for traveling including flights, hotels and rental cars and/or who earn flight miles for a free flight.
5. “The Convenience Shopper”- people who believe credit cards are more convenient than cash or a debit card.
6. “The Emergency Shelter”- people who keep a credit card in case of expensive emergencies.
7. “The Fear Tranquilizer”- people who feel more secure knowing they have a credit card.
8. “The Credit Score Keeper”- people who feel they need a credit card to build and keep up their credit score.

If you see yourself here, give the book a read or listen (audio book may be available on Hoopla for free through your library) and let him try to convince you as he convinced me.

What I learned is that there are several research studies that have been done that show that people spend less with a debit card than with a credit card and even less with cash. Our brain just processes it differently. When we pay with credit, it doesn’t hurt as much because we aren’t actually spending the money. We are borrowing the money to pay it back later. And our brain knows without having to consciously think about it that if we wanted or needed to, we could delay paying for the purchase indefinitely by making minimum payments.

In 2016 a study at MIT gave participants the opportunity to purchase sold out tickets to a professional basketball game. Half of the participants were told they had to purchase the tickets in cash and half were given the option to pay with a credit card. The participants who paid with a credit card were willing to pay double the amount of those paying with cash (a 100% premium).

In 2021 a study was completed by the School of Management at MIT and a professor at the University of Utah which used fMRI data to study the brain at the point of purchase using participants own cash or credit card. What they found is compared to cash, credit cards serve to “step on the gas” causing participants to spend more and make more last minute/impulse purchases.  The study showed that using a credit card activates the parts of our brain that triggers pleasure hormones like dopamine and the same parts of the brain that are triggered by addictive drugs.

I had a little moment of self-awareness when I heard all of this. I remembered times when I would rationalize an extra expense or an upgrade because I was getting 3%, 5% or 7% cash back on it. I remembered times that I considered Amazon purchases “free” because I used rewards points to purchase them.  I realized that the credit card companies knew what they were doing. By making me feel like I was getting a good deal, I was more likely to spend more.