An Introduction To Rewards Checking Accounts

A rewards checking account is an account that requires you to perform certain actions in order to receive a higher than normal APR. Most common actions:

• Enroll in eStatements. Sending out paper statements costs banks and credit unions money, by requiring that you enroll in eStatements they are able to avoid this expense.
• Receive a direct deposit monthly. Banks want you to receive your paycheck or government benefits to their account, by doing so this helps ensure that you’re using this account as your primary account. Usually they have a stipulation that says that this direct deposit must be a paycheck or government benefit, but usually an ACH transfer will trigger this requirement as well. We put together this list of what does and doesn’t work for each individual bank, if we’re missing one let us know and we will add it.
• Make a minimum number of debit card transactions. This is another way the bank tries to ensure that this is your primary checking account, they also might earn a slight processing fee whenever you use your debit card. There are a number of easy ways to meet these minimum requirements.

Some banks/credit unions also have additional or less requirements. In additional to this, they also limit the amount of money that can be deposited that earns this high rate. The upside is that the majority of these accounts do not come with any monthly fees and also generally reimburse ATM fees when you use an ATM other than theirs.

The downside is that some of these banks/credit unions use this as a bait and switch product, they’ll offer a high interest rate for a few months in order to get a bunch of new customers and then lower the interest rates once they’ve gotten them to change their banking habits and made their financial institution their primary account. They are able to do this because the fine print generally doesn’t mention any minimum term that the higher than normal rate will last.

When deciding if a rewards checking account is right for you, you need to ask yourself the following questions:

• What rate am I currently receiving on my deposits? What rate are they offering?
• What are the requirements to get this reward rate?
• What fees does the reward bank/credit union have? How does this compare with my current deposit account?
• Would I be better off choosing a bank that offers a flat new account bonus?
• How long has this bank been offering this reward rate? Have they reduced it in the past? If so, why?
• What’s the maximum I can have deposited and still earn the reward rate?

Personally whenever I open a new bank account, I try to get at least $100 in value out of it. That’s because there are a lot of new checking account promotions where you can earn that or more by opening a new account. You cannot open unlimited accounts due to new accounts being opened recorded in your ChexSystems file.

We’ll be posting about some of the more well known and popular rewards checking accounts over the new few weeks. These posts will also be displayed below when they go live.

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If there is a specific account you’d like covered, please let us know. At the moment we are only planning on covering accounts that can be opened nationwide.