For many families and financial institutions, there’s a powerful tool often overlooked during back-to-school prep: the debit card.
Whether in high school or college, today’s students want tools that offer financial freedom with guardrails, digital convenience and even rewards for their everyday purchases. Debit cards have consistently met these needs: they were consumers’ preferred payment method in 2024 for in-person payments, a position they’ve held for over a decade. Households earning under $75,000 per year (likely including many traditional students) show the highest debit card usage rates, signaling the importance of this tool.
For community banks and credit unions, offering or enhancing debit card programs provides a timely opportunity to increase card-based revenue and engagement, while building lifelong relationships with many consumers, including students.
Debit: the Perfect Fit for Students
Gen Z increasingly prioritizes debt avoidance, with 68% reporting stress from credit card bills—not surprising, given the average credit card interest rate is over 20%.
From middle schoolers managing their allowance to college students budgeting for books, debit cards hit the sweet spot: flexible enough for daily life but structured enough to curb overspending. This combination allows students to develop financial discipline and stay out of debt.
Specifically, debit cards are such a smart tool for students because they offer:
Real-time spending with built-in limits
Debit cards draw directly from an account holder’s existing funds, which keeps students from living above their means. Unlike credit cards, debit cards eliminate surprise bills, high interest and risk of long-term debt. For students, this means financial freedom with smart boundaries (and for parents, peace of mind).
A first step toward financial literacy
Debit cards deliver real-time feedback through transaction alerts, balance tracking and mobile insights, teaching students to budget properly, recognize spending patterns (and anomalies) and set savings goals. These are all skills that build confidence and set them on the right financial path for the long term.
Real-time alerts and spend-from-balance controls give students financial freedom while keeping healthy guardrails in place.
Access to motivating (and educating) rewards
While credit card rewards usually get the spotlight, debit card rewards programs can deliver similarly valuable experiences that appeal to students.
For students, debit rewards offer meaningful motivation to use their card wisely, especially for frequent purchases like gas, food or school supplies. And for financial institutions, they offer a powerful engagement, loyalty and revenue tool.
The strategic role of debit card rewards
Debit card rewards aren’t just a nice perk—they’re a strategic growth lever that can:
Increase spend and card usage
A tiered debit card reward program encourages students to use their card more often, instead of cash or other payment options. With the right approach, you’ll see increases in transaction volume and interchange revenue and have a better chance at top-of-wallet status for years to come. With the average debit card transaction exceeding $46, even a small increase in usage can have a significant financial impact.
Strengthen engagement and brand loyalty
Rewards turn routine transactions into positive reinforcement, especially when paired with personalized “nudges” and other digital interactions. For example, offering extra points during move-in week or textbook season can create a moment of surprise and delight while encouraging deeper engagement with your app.
Attract and retain young members
For students new to banking, debit rewards can be a key differentiator. Offering valuable, easy-to-earn perks (like cash back on frequently used services) positions your institution as student-friendly, tech-savvy and in touch with modern consumer preferences.
These early experiences make a difference. Acquiring student accounts today increases the likelihood of cross-selling products like credit cards, auto loans or home mortgages in the future.
Tiered debit rewards turn everyday purchases into lasting loyalty.
Launching a smarter debit card program
To create or expand a debit card program that appeals to students and other account holders, offer tiered rewards where each tier provides valuable rewards for a small monthly fee. Popular rewards with students include:
- Roadside assistance (another peace-of-mind perk for parents)
- Discounts on travel and restaurants
- Cell phone protection
- Prescription medication discounts
These are things they’re often paying for already. When you bring everything under one umbrella, you have a product that offers potentially more savings, creating even more value for account holders.
From swipes to stickiness
Back-to-school season can be more than a mad dash for school supplies. It’s a chance for a fresh start. For students managing their money for the first time, a debit card can be a financial foundation to build on.
When your community bank or credit union provides that first meaningful financial tool, you have the opportunity to offer guidance, accountability and personal growth. That’s a valuable relationship, and when you add in debit rewards and provide a seamless experience, brand loyalty builds naturally and creates a powerful bond.
That’s why it’s vital to view debit cards as not just a short-term engagement tool but also a long-term investment in relationship-building. With seemingly limitless banking options available today, getting in first and making a positive impression is more important than ever.
A win-win scenario
The debit card, especially one that delivers tiered rewards, is a perfect example of a mutually beneficial product, bringing tangible value to a student’s life and revenue to your financial institution. Young people gain financial autonomy without incurring debt, while your institution builds lasting relationships and reaps revenue through swipes and program fees.
When everybody wins, you know you’re on the right track.
Debit rewards are just one piece of the puzzle, though. For a deeper look at how community banks and credit unions can strengthen engagement and win long-term loyalty, explore our white paper.
Read the white paper
Charles Baker, Director of Client Service
Charles brings with him over 26 years of executive level sales, client services and operations experience in the banking, technology, and consulting services industries. As the Director of Client Service for CSI’s Velocity team, he oversees a team of client service managers in delivering and optimizing Velocity solutions. He works closely with not only his team and the clients, but all Velocity product owners and steering committees. Since Charles’ responsibilities touch on all aspects of CSI’s Velocity products and their deliveries, he works closely with the sales team as a subject matter expert and builds the financial performance models utilized in the sales process to set expectations with the prospective client. He holds a Bachelor of Business Administration degree from Texas State University and lives in Austin, TX with his wife and two daughters.