Wednesday, July 18, 2012 - 5:33 AM

Using Multiple Debit Cards At A Store Checkout

Many stores allow you to use multiple credit or debit cards at checkout. As this My Money Blog post describes, this can be useful when you are trying to spend the remaining balance on a prepaid credit or debit card. This can also be useful if you have multiple reward checking accounts. For example, you can tell the cashier to charge $20 on one card and the rest on the other. That's a quick way to get a transaction on two cards. You can do this with more than two cards, but it gets a little more time consuming.

I've heard about people making multiple transactions at the self-checkout line. Just remember that banks and credit unions depend on customers to spend a reasonable amount on their cards to be able to pay the higher interest rates on the reward checking accounts.

KenBDG5,176 posts since
Nov 29, 2009
Rep Points: 117,645

1. Wednesday, July 18, 2012 - 1:33 PM

This has been the easiest way for me to manage multiple rca's. But in trying to keep the transaction amounts significant (for the banks/cu's to make more and thus hopefully maintain their interest rate), perhaps you can clarify:

a) How much more do financial institutions make on the signature transactions? I try to mostly do signature, except when the qualification deadline is near and I need to post more quickly with pin-based. But unless I'm familiar with the posting pattern of the vendor, the signature transactions can sometimes post unpredictably.

b) Do financial institutions make their %'age off the total amount of the transaction, regardless if cash back is included? If a charge is small, I often charge it pin-based and include cash back to make the total more signifcant, because I assume that helps.

c) What is a suggested monthly transactions amount threshhold or average to meet to make it worthwhile for the banks/cu's? I'm not a fan of those programs requiring a total minimum purchase to qualify, plus they range wide enough that I'm not sure which to use a reasonable indicator. But if interest rates get lowered because the debit charges weren't high enough, I would've liked the banks - especially the credit unions since they're member-based - to suggest (not require) a target to meet or exceed, which if done collectively would help them maintain their rates.

ekat72 posts since
Jan 22, 2010
Rep Points: 223

2. Wednesday, July 18, 2012 - 2:02 PM

a) How much more do financial institutions make on the signature transactions?

I've been told the interchange fees from signature-based debit card purchases average around 1.00%. These are much higher than PIN-based debit card purchases, but I'm not sure by how much.

b) Do financial institutions make their %'age off the total amount of the transaction, regardless if cash back is included?

I don't believe there is any interchange fee for the banks from the cash back that is received from PIN-based debit card purchases. I don't know this as a fact. It's just an assumption on my part.

c) What is a suggested monthly transactions amount threshhold or average to meet to make it worthwhile for the banks/cu's?

I received some reward checking data from a credit union. I was told that the average reward checking balance was $7,700 and the average monthly amount of debit card purchases was $900. Based on $900 monthly purchases and a 1% interchange fee, the average monthly revenue banks would receive is $9. If the $9 is returned to the account holders as interest and if the average balance is $7,700, that would provide account holders with an interest rate for that month of 1.40% ($9*12/$7,700).

I did not ask about the average percentage of checking account members who do not meet the monthly requirements. That can help the reward checking rates a little.

To pay a higher interest rate than 1.40%, the credit union would have to pay for it by other methods that are more typical for liquid accounts. If they could be as effiicient as Incredible Bank with a 0.88% apy on its checking account, that would make for a total apy of 2.28%.

KenBDG5,176 posts since
Nov 29, 2009
Rep Points: 117,645