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Rewards Checking


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When I graduated from college, I already had a checking account that my parents had set up for me. I had one of those books of temporary checks that I never used. The account was one of those free accounts that didn’t require a minimum balance and didn’t have a maintenance fee. It came with a Visa debit card that doubled as the ATM card. I was happy with the account.

A few years into college, I started researching different types of checking accounts. I had heard my friends talking about how they earned a small interest on their checking accounts. It was worth it since the account was still free. I had no feel for interest rates so I thought that a 0.02% APR was dandy. Yeah, that rate doesn’t even keep up with inflation.

Recently, I stumbled upon a product that smaller banks offer to try to stay competitive with the large national chains and online banks. Different banks call it different things, but I’ve found it mostly referred to as “Rewards Checking”. These checking accounts have APRs that are higher than competitive CDs, but have a few requirements.


How much higher are the rates? At the time of writing this article, Bankrate.com showed the average 1 year CD rate as 0.92%. My local bank, Amegy.com offered 1.50% on what they call “Smart Yield Checking.” My local credit union, FCCU.og offered 3.01% on what they call “First Rewards Checking.”


So what’s the catch you ask? Good question. The specifics are different from place to place but the gist is all the same.

  • They want you to direct deposit money.
  • They want you to use online statements so they don’t have to print and mail statements to you.
  • They want you to log in to your account every month.
  • They want you to make a certain number of debit transactions per month.

The business model is pretty simple. They want your money, they want to save on overhead by doing everything electronically, and they want you to use your debit card so they get the commissions from it.


If you end a month without meeting all their requirements, your account becomes a regular checking account until you regain “rewards” status. Most banks have a set period of time as well as list of requirements for getting back the “rewards” status.

Bottom Line

If you are going to be using your debit card for transactions anyways, there is no reason not to get one of these accounts. The only people that would need to look into the pros and cons further are those who have a separate rewards credit card that they use for purchases. I have both, but I tend to charge larger amounts to the rewards credit card and smaller amounts to the debit card. Traditionally, these types of accounts will help you keep up with inflation at a minimum. Remember, you’re pretty much lending money to the bank when you deposit into an account. Why not get paid for doing that?

Categories: Banking
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