U.S. airlines are getting back into the debit card business, with United and Southwest introducing cards.
United’s MileagePlus Debit Rewards Visa and the Southwest Airlines Rapid Rewards Visa each were launched in partnership with Minnesota-based Sunrise Banks.
Both cards offer a less generous package of perks than the airlines’ credit cards and are geared toward younger flyers. The cards have the benefit of not requiring a credit check.
“Our goal is to have a card for every type of flyer who flies United, no matter their need,” United MileagePlus CEO Richard Nunn said during a media call.
U.S. airline debit cards were once common but disappeared quickly after a provision in the 2010 Dodd-Frank consumer protection act placed a tighter cap on the per-transaction interchange fee that merchants’ banks pay to consumers’ debit card issuers. Debit card issuers use those fees, in part, to pay for the airline frequent flyer points that are offered as enticements for flyers to sign-up for co-branded cards.
Airlines then turned all their focus to credit cards, which weren’t impacted by the cap.
The Southwest and United debit cards are the first two leisure-focused cards to return to the market, though Delta offer the SkyMiles Business Visa debit card for corporate customers, which it issues in partnership with Charlotte-based Truist Bank.
United executives declined to delve into what has changed to make a co-branded debit card once again viable, though Bob Daly, the airline’s managing director of global co-brand cards, did acknowledge that pre-2010 debit cards offered “far superior” benefits to the new MileagePlus debit card.
Sara Rathner, a credit card expert for NerdWallet, said one likely explanation lies in the importance of airline revenue from loyalty programs and co-branded cards.
United, for example, disclosed revenue of $6.2 billion in 2024 from its co-branded credit card with JP Morgan Chase, up from $600 million in 2006, according to an October report from IdeaWorks.
Debit cards that appeal to young flyers can pay dividends over the long run.
“Brands do this all the time, capture people while they’re young and build that loyalty for years to come,” Rathner said.
The Southwest and United debit cards offer similar perks — one point per dollar spent on the airline and one point per two dollars spent on other purchases. Neither card has monthly or annual fees, provided that the average daily balance meets a minimum threshold. For Southwest, the balance must average $2,500 to avoid a $6.99 monthly fee, while at United the average is $2,000 to avoid a $4 monthly fee.
Each card offers other enticements. Southwest offers 2,500 Rapid Rewards points to new cardholders after they make a second deposit of $100; a one-time annual 20% flight credit; and the ability to earn up to 7,500 points per year toward a Companion Pass through purchases.
United is offering 10,000 MileagePlus points for new cardholders who spend $500 within the first four months; 2,500 bonus miles at the end of the year for expenditures of at least $10,000; and bonus miles for maintaining an average annualized daily balance of at least $2,500.
The perks still pale in comparison to airline co-branded credit cards, which typically offer one point per dollar spent, with multiples for spending with the airline and airline partners as well as opportunities for status accrual. Other perks can also include free checked bags, early boarding and in the case of United, lounge access.
Flyers who get the Southwest or United debit cards must open an account with Sunrise Banks.
Rathner said it’s likely other airlines will follow by issuing debit cards of their own. “Whenever you see one or two airlines do something, you see the other airlines fall in line,” she said.
The debit accounts, she said, can make sense for consumers, similar to high-yield savings accounts or debit cards that give cash back for ordinary expenses.
“You’re going to spend money on stuff anyway, you might as well earn some miles,” she said. (https://www.travelweekly.com/Travel-News/Airline-News/US-airlines-bring-back-debit-cards?ct=)
