Green Dot's (NYSE:GDOT) stock hasn't exactly performed well recently. In fact, after the company reported first-quarter results, shares plunged by 26% in a single day. It wasn't because of the company's earnings -- Green Dot actually surpassed expectations for earnings per share (EPS) in the quarter. Instead, investor disappointment stemmed from the company's decision to aggressively increase its marketing and technology spending, which in turn forced the company to trim its full-year guidance.

Fast-forward a few months and we just got a glimpse of a truly innovative product that Green Dot just released. Known as the Unlimited Cash Back Account, it pairs a high-yield savings account with a high-reward debit card to create a truly innovative option for consumers. I recently spoke with Green Dot CEO Steve Streit (check out the August 5 Industry Focus: Financials podcast for my full interview), who confirmed that this is a big part of the company's increased marketing push.

With all of that in mind, here's a rundown of Green Dot's latest banking product and why it's different than the competition.

Cash sticking out from a jeans back pocket.

Image source: Getty Images.

Green Dot's Unlimited Cash Back Account

The headline news here is that Green Dot is essentially combining a high-yield savings account with a cash-back debit card to create what appears to be in a class by itself when it comes to consumer value. Here are the two key points:

  • The Unlimited Cash Back Account pays a 3% APY on deposits, and it's FDIC-insured. In contrast, the highest-yielding major savings accounts in the market pays just 2.3% as of this writing. Plus, in our interview, Streit confirmed to me that this isn't a variable interest rate that is tied to any benchmark -- the company plans to keep it at 3% for the foreseeable future.
  • The account's debit card gives customers a 3% cash-back bonus on all online and in-app purchases. Just to name a few examples, this includes everything you buy on sites like, your Uber rides, and more. This would be a strong cash-back rate for a credit card, but for a debit card, this is unheard of.

There are several other features designed to make the account convenient and high-value to consumers, such as a free ATM network, easy cash deposits, no minimum deposits or overdraft charges, and an easily waived monthly fee. However, the deposit interest and debit card cash back are certainly the big differentiators.

Why investors should pay attention

Here's the big takeaway for investors. Green Dot's stock plunged earlier this year due to the uncertainty surrounding its increased investment in the future. And the Unlimited Cash Back card is the first example of that plan in action.

The question is, with such a high yield and cash-back rate, can this be enough to move the needle? I asked Streit about the generous yield and he confirmed that it can indeed be possible to offer a 3% yield and 3% cash back while still making a profit. He says that Green Dot's experience, years of consumer data, existing banking infrastructure, and scale (50 million customers) make it possible.

"It is a very, very rich offer, and it is an offer we expect a lot of customers will not only want to take advantage of, but their lives will be benefited from it," Streit told me. However, he said, "We believe we can offer that extreme value at a price where we can make a very good margin."

Over the next few quarters, as the new account rolls out, it will be interesting to see the impact on Green Dot's bottom line. If it does become widely adopted and turns out to indeed be profitable for the company, it could make the surprising increase in marketing spend well worth it.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.