I Love My PayPal Debit Card – How I Earn 5% Back on Groceries and Apparel

It pays dividends to use the right credit or debit card at the checkout counter. Undoubtedly, some consumers value simplicity and ease-of-use with any old credit card, typically those that don’t have hefty annual (or monthly) fees to worry about.

Indeed, the last thing one wants to worry about is which one of many cards should be swiped at the till when there’s already so much on the minds of consumers as the budget becomes a bit tighter at the hands of Trump tariffs. Also, credit card optimization, churning, or hacking really isn’t everyone’s cup of tea, given the amount of time and effort invested to save up a few dollars here and there.

As competition for the business of consumers gets a bit fiercer, so too have the rewards, not just for paid cards, but free ones as well. Additionally, some of the attractive perks (think 5% returns on goods spent) are now featured in no-fee debit cards, like those offered by fintech firm PayPal (NASDAQ:PYPL). 

In any case, you don’t need a wallet full of more than 10 cards to get a better return on your spending anymore. In this piece, we’ll look into the case of a Reddit user who’s delighted with the 5% return they’re getting from their spending (most notably grocery items and apparel). And the best part is they’re not paying a fee to use the card.

PayPal debit cards offer a great return on spending.

The Reddit user who recently took to the r/CreditCards subreddit has shone a pretty bright light on the PayPal debit card, which has given them 5% cash back across a number of grocery stores (big and small) in addition to clothing stores categorized as “apparel.”

Undoubtedly, some Reddit commenters noted on just how “overpowered” the card is and how much extra they’ve managed to save by putting it to work over their typical bank debit cards, many of which offer next to nothing in terms of rewards and security features.

Of course, time will tell how long PayPal’s impressive debit card will continue to offer such generous cash-back rates. For now, we can only speculate if the cash-back rate will be brought back down to Earth. Certainly, such a debit card could remain competitive, even with a cash-back rate closer to 3%. Before you sign up for the debit card, though, there are some catches that are worth noting. 

For one, you need a PayPal account (and probably a balance, too) to be able to get a PayPal debit card. Additionally, a lot of retailers simply do not accept debit cards, especially in an era where many opt for credit cards, given their relative benefits (building a credit score, added consumer protection, and flexibility with when to pay).

Will that attractive 5% cash-back rate on eligible goods stick around?

For many folks interested in the debit card, the big question is if the 5% (a too good to be true rate for a free card?) rate will stick around. The last thing you want is for a “nerf” after you’ve signed on.

Personally, I think the 5% rate of return on the debit card is sustainable, especially since there’s a monthly cap on spending that’s eligible for the 5% rate (it’s currently at $1,000, which effectively caps monthly cash back at $50). If you seldom spend more than $1,000 per month on groceries, apparel, gas, or other categories, though, the card is definitely worth considering if you’re already a PayPal customer.

I find the debit card offering to be quite strong, especially for younger consumers who want a high rate of return without having to pay any sort of monthly fee. As always, put in the homework before signing on for another new card, and, if you can afford it, check in with a fiduciary (a financial advisor who puts your interests first) if you’re serious about the pros and cons of putting more of the tab on a debit card versus a credit card.

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