How Airlines Suddenly Make Money on Debit Cards Again

For more than a decade, airline debit cards were extinct - buried under the wreckage of the 2011 Durbin Amendment. And for good reason. When your per-swipe revenue drops from a few cents to fractions of a cent, the math stops working.

But in late 2025, two U.S. airlines quietly resurrected the debit card: United with its MileagePlus Debit Rewards Card, and Southwest with a parallel launch days earlier.

The question practically writes itself:
How do airlines make money on debit cards when debit interchange is capped at $0.21 plus 0.05%?

The answer isn’t about the card. It’s about the ecosystem: regulation arbitrage, deposit mining, loyalty monetization, and a long game that turns miles into bait for both banks and customers.

Let’s break down how this “impossible” product suddenly makes sense again.

The Durbin Collapse: Why Debit Rewards Died

Before 2011, debit cards were a decent business. Banks could charge around 1% in interchange on signature debit transactions. That left enough margin to kick a little back to users in the form of points or cash, and enough to share with partners like airlines.

Then came the Durbin Amendment, a small clause in the Dodd-Frank Wall Street Reform Act that changed everything. It limited interchange fees on debit cards issued by banks with more than $10 billion in assets to $0.21 + 0.05% of the transaction amount (plus a $0.01 fraud adjustment).

That cap meant a $100 purchase generated (wait for it...) about $0.26 in total revenue to the issuing bank. Not per mile. Per transaction.

In one stroke, the economics of debit cards collapsed. Airlines couldn’t get paid. Banks couldn’t fund rewards. Co-branded debit cards disappeared overnight.

For more than a decade, credit cards ruled the co-brand kingdom. They had higher interchange (1.5-3%), revolving balances, and huge signup fees from issuers to airlines. Mileage programs became multi-billion-dollar profit centers. American, Delta, and United all made more money selling miles to banks than selling flights to passengers.

Debit? Dead weight.

The Loophole Play: Small Banks, Big Interchange

Now fast-forward to 2025. United’s new debit card is issued by Sunrise Banks N.A., a Minnesota-based community bank with less than $10 billion in assets. That detail is everything.

Because banks under the $10 billion threshold are exempt from the Durbin caps.

They can charge normal interchange (often 0.8% to 1.0% on signature debit) - roughly 15 to 20 times more than the capped rate large banks face.

That’s the loophole United and Southwest just drove a Boeing through.

Here’s the new math:

On that $100 spend, the small bank earns nearly a dollar in revenue. From that dollar, the bank can afford to:

• Buy miles from United at ~1¢ each (so 1 mile per $2 spent = $0.005/mile cost)
• Share revenue with the airline
• Cover program costs
• Still net a few tenths of a percent in profit

Suddenly, the debit card lives again - not because the market changed, but because the issuer changed.

This isn’t a return to debit rewards. It’s a regulatory arbitrage play wrapped in loyalty branding.

The Mileage Multiplier: Selling Miles Is Still the Real Business

For airlines, this is not about transaction volume. It’s about miles. Always has been.

Here’s how the flow works:

1. The bank buys miles from United (let’s assume around 1¢ per mile, industry standard).
2. The consumer earns 1 mile per $2 spent on everyday purchases.
3. United books immediate revenue for the miles sold, long before any flight is redeemed.

That’s pure profit front-loaded into the loyalty program. United gets paid now. The flight, if it ever happens, gets paid later (and usually at a lower cost than the value of the miles issued).

So even before the bank earns a cent on interchange, United has already made money by selling its own currency. The airline’s true customer isn’t you - it’s the bank buying miles by the millions.

The Banking Hook: Why a Checking Account Is the Real Prize

But here’s the real innovation: the “earn miles for saving” feature.

United’s debit card pays bonus miles based on your average daily balance - up to 70,000 miles a year for keeping $50,000+ in the account.

At first glance, it looks like a quirky reward. But this is where the economics get beautiful - for the bank.

When a customer holds $50,000 in a checking account, the bank gets a zero-cost funding source. Unlike certificates of deposit or high-yield savings accounts (which cost 4-5% APY in today’s market), a basic debit-linked checking account costs the bank close to 0% interest.

That deposit can then be:

• Lent out as small business or consumer loans at 6-8%
• Parked in Treasuries at 5%
• Or simply used to strengthen the bank’s capital ratios, enabling more lending

For every $1 billion in checking deposits, a small bank can generate $40-60 million in annual interest spread - with almost no marketing cost if the deposits come in organically through airline partnerships.

Paying out a few hundred dollars’ worth of miles per customer per year? That’s a rounding error.

In other words: when you “save for miles,” the bank gets cheap funding and brand halo. The airline gets cash from mile sales and a more deeply engaged loyalty member. Both sides win.

The Funnel: Debit as the Credit On-Ramp

There’s another layer here: long-term acquisition.

Debit cards attract two audiences airlines rarely touch:

• Credit-rebuilding consumers who can’t qualify for credit cards
• Credit-averse consumers who refuse to use them

By giving these customers a debit option, United gets something credit programs can’t: a gateway product.

A customer who spends a year earning 5,000-10,000 miles through debit is already enrolled in MileagePlus, already emotionally tied to the program, and already data-verified through banking history.

That person is now a prime candidate for the Chase United Explorer Credit Card, which offers better rewards and higher margins for everyone involved.

The debit card isn’t an endpoint - it’s a feeder system for the credit portfolio. United builds the loyalty relationship early, then hands the lead to Chase when creditworthiness improves.

The funnel economics are simple:

• Debit = low-margin, wide top of funnel
• Credit = high-margin, targeted bottom of funnel

One builds trust; the other prints money.

The Consumer Side: What’s Actually in It for You?

For the user, this card is mostly psychological. If you’re not eligible for a credit card, or if you avoid credit by choice, this gives you a way to earn something back from your spending.

At 1 mile per $2, you’re getting roughly 0.5¢ per dollar in value - less than half what most basic 1% cashback debit cards pay. But the emotional pull of miles is stronger than math. A $500 flight feels different from $250 in cash, even if the math says otherwise.

And for people sitting on idle cash (tens of thousands in checking) the earn-for-saving feature creates a small, visible “return” that keeps them loyal.

You might not get the 4.5% APY that Ally or Marcus offers, but the allure of “free flights” is often more motivating than a few dollars of interest you never see.

It’s behavioral finance disguised as loyalty.

The Bank’s Endgame: Deposits Are the New Gold

Let’s put numbers to this.

Suppose Sunrise Banks attracts 100,000 United debit cardholders, each with an average checking balance of $5,000. That’s $500 million in deposits.

If Sunrise earns a 4% yield on that capital and pays virtually zero in interest, that’s $20 million in annual spread income.

Now subtract the cost:

• $50-$100 in miles and rewards per account per year
• Maybe $5 million in program costs

That’s still $15 million in pure net interest margin, every year, off deposits they acquired through brand halo, not advertising.

For small banks, that’s transformative. They get national exposure through United’s marketing muscle, access to high-value customers they could never reach on their own, and sticky deposits that rarely churn - because, let’s face it, people don’t switch banks when their miles are tied to the account.

That’s not customer acquisition. That’s asset gathering with a loyalty twist.

The Airline’s Endgame: Loyalty as a Platform, Not a Perk

United’s Managing Director of Global Co-Brand Cards said it outright:

“We’re constantly looking for new ways to add value and optionality for our members, and a debit card is a natural next step.”

Translation: MileagePlus is now a platform, not a program.

The debit card extends the brand’s reach into the everyday financial lives of consumers. Every transaction, every balance, every saved dollar generates data, engagement, and (eventually) credit opportunities.

And every single one of those touchpoints flows back to United as revenue - either from the sale of miles, the credit card cross-sell, or the increased breakage (unused miles that expire or go unredeemed).

If you’re United, that’s a triple win:

1. Immediate revenue from selling miles to Sunrise.
2. Deferred profit from unredeemed miles.
3. Future revenue from upgraded credit products through Chase.

It’s not a debit card - it’s a loyalty acquisition machine wearing a Visa logo.

The Bigger Picture: Why Everyone’s Watching

Expect more airlines to follow. The Durbin exemption has created an opening for small-bank partnerships, and airlines are realizing they don’t need JPMorgan-level scale to make the economics work.

The math pencils out for both sides:

• Small banks get cheap deposits + brand exposure
• Airlines get mile revenue + funnel leads + loyalty data
• Consumers get a low-friction way to feel rewarded

That triangle - bank, airline, consumer - used to be limited to credit. Now, debit joins the equation.

The move also signals a subtle shift in airline economics: the loyalty business is no longer just about travel. It’s becoming a full-fledged financial ecosystem, where points and miles function as quasi-currency across checking, savings, and retail spend.

The airline isn’t just your carrier anymore - it’s your banker, your payment network, and your financial brand of choice.

And every dollar you hold or spend inside that system feeds the engine that keeps planes flying.

Final Approach

When you look at the United debit card, don’t think “miles for spending.”
Think cash flow for deposits and funnel for credit.

The airline makes money by selling miles to a small bank.
The bank makes money by lending your deposits.
And you get to feel like you’re earning something for doing what you were going to do anyway.

This isn’t nostalgia for debit cards. It’s a blueprint for the next loyalty frontier - where flying is optional, but belonging is profitable.

Welcome to the second life of the airline debit card.