From Cash Back to Interest Rates: Find Out if a Rewards Checking Account Is Worth It

If earning cash back whenever you make purchases with your debit card sounds appealing, a rewards checking account could be worth checking out.

Rewards checking accounts work just like traditional checking accounts, but you’ll get excellent incentives such as higher interest rates or cash back on purchases when you meet specific requirements.

MoneyRates created this guide to rewards checking to help you better understand this type of bank account and determine if it aligns with your banking needs.

What Is Rewards Checking?

Standard checking accounts can be invaluable for paying bills and scheduling online payments, eliminating the need to mail paper checks or make in-person visits. In today’s digital environment, paying for restaurant or grocery purchases using an ATM debit card (or credit card) is much more commonplace than paying with cash.

Rewards checking accounts give you a bonus for accessing the features you’ve long enjoyed with your traditional checking account, provided you hit some monthly targets. For instance, you may have to make a certain number of debit card purchases, maintain an average daily balance, or have a certain number and amount of direct deposits scheduled to your checking account to receive your predetermined rewards and bonuses.

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What Are the Different Kinds of Rewards?

If you have a few credit cards, you likely are familiar with rewards programs offered by financial institutions. With credit cards, rewards include perks such as cash back on purchases, airline miles, statement credits, or gift cards to major retailers.

Here are five standard perks and incentives tied to rewards checking accounts.

Cash Back

Cash back on rewards checking accounts is typically a percentage of eligible purchases, such as 2-4 percent earned every time you buy gas, groceries, or other retail purchases.

ATM Fee Reimbursement

Typically, accessing out-of-network ATMs carries two tiers of fees: the first is assessed when you use the ATM, and the second is assessed by your financial institution. A rewards checking account may not charge you for using out-of-network teller machines and reimburse you for the initial point-of-use charge at the out-of-network machine. However, there’s usually a cap on fee reimbursement, such as $15 or $20 monthly.

Accounting Opening Bonus

If you meet certain criteria when you open a rewards checking account, such as an initial account balance threshold or setting up a certain number of direct deposits, you may receive a one-time cash bonus or similar reward.

Interest Earning

Traditional checking accounts don’t pay interest on account balances, regardless of whether you have $1,000 or $100,000 in your account. Some rewards checking accounts are interest-bearing accounts, so your money can earn a bit of interest each month. Interest rates may have limits, such as 4 percent on $15,000, and lower rates on any balances higher than that.

Additional Perks and Bonuses

Depending on the financial institution, you may earn perks such as statement credits, airline miles, discounts at popular retailers, iTunes or Google Play credits, free ID theft protection, and similar benefits.

Some rewards checking accounts may also offer a slight interest rate discount on loans when you set up automatic monthly debit payments.

How Does a Rewards Checking Account Work?

Rewards checking programs vary among financial institutions, and each bank or credit union will likely have different requirements you’ll need to meet to trigger the rewards, perks, and bonuses.

Minimum requirements could include:

• Setting up automatic transfers into eligible savings accounts
• Have one or more direct deposits into your checking account.
• Making several debit card transactions monthly, often between 10 and 20. Transactions may also need to meet a minimum aggregate total of $500 each month.
• Signing up for online banking, paperless statements, text notification services, or online bill pay services.
• Maintaining an average minimum balance.
• Some rewards checking accounts may require you to meet a combination of all of these requirements.

Check with your financial institution before opening a rewards checking account to ensure the perks and requirements align with your banking habits and needs.

What Kind of Consumer Is Rewards Checking Best For?

For starters, reward checking accounts are typically personal checking accounts – businesses, trusts, and similar types of accounts aren’t eligible.

Rewards checking works best for consumers who use their debit cards frequently or daily since you’ll almost certainly trigger your account’s monthly minimum requirements. They also can be a good fit if you have multiple direct deposits monthly and maintain a high monthly minimum balance to earn the highest interest possible.

If you don’t use your debit card and prefer writing checks and getting paper banking statements in the mail, there may be better options than this type of bank account.

Pros and Cons of Rewards Checking

How to Make Sure You Get Your Rewards

If you’ve met the monthly requirements of your rewards checking account, you’ll want to ensure you reap those benefits.

Claiming your rewards largely depends upon the type of rewards program your financial institution offers. Cash back rewards can be applied as a credit to your account, typically through a rewards portal on your financial institution’s web page. It may take a few clicks to get set up, but you also may be able to have your rewards automatically deposited into your rewards checking account. Some banks may even allow you to redeem cash-back rewards at ATMs.

You also may be able to use the cash back you’ve earned to make purchases at participating merchants if your rewards program features a “pay with rewards” feature. Alternatively, if your bank has a “redeem for purchases” feature, you can designate earned cash-back rewards to cover retail purchases you’ve already bought.

Other perks may be redeemed slightly differently. Airline miles, for instance, may have to be redeemed through a partner airline – same with hotel stays and rental cars, if applicable. Rewards points for gift cards, app store credits, and similar perks may require a digital transaction that redeems your points for credits at participating retailers.

The key to claiming your rewards is understanding how your bank or credit union’s rewards program works and whether or not it has a dedicated redemption portal on its website.

Four Examples of Banks with Rewards Checking Accounts

Online and regional banks and credit unions are typically excellent choices for rewards checking accounts because they tend to offer higher interest rates on rewards checking accounts than financial institutions with a national footprint. However, this rule is flexible – national banks may have more robust rewards offerings due to stronger retail and travel partnerships.

Below, we’ve highlighted four different rewards checking programs to give you a clearer picture of what kinds of benefits you might enjoy after opening a rewards checking account.

Discover® Cashback Checking

Discover offers a no-frills rewards checking account that’s also wallet-friendly since there are no monthly maintenance or minimum account balance fees. Wire transfers come with a fee, but you can use Zelle and ACH transfers without incurring costs.

Best rewards perks

Discover’s rewards checking account pays you cash back on purchases up to $3,000 monthly. That could add up to $360 a year just for using your debit card. Its rewards checking has no ongoing minimum balance requirements to waive monthly maintenance fees.

Drawbacks

Discover doesn’t offer any interest on its rewards checking account, though you could open a high-yield savings account.

SoFi Plus 

New members who enroll in SoFi Bank’s premium membership account can nab a host of perks and rewards from the online bank headquartered in San Francisco.

Best rewards perks

SoFi pays a healthy APY on savings balances if you set up qualifying direct deposits, but interest on checking accounts is much lower.

You also may qualify for a promotional direct deposit bonus of $50 if you have up to $4,999 in qualifying deposits.

That bonus jumps to $250 for qualifying direct deposits exceeding $5,000. SoFi may also offer double rewards points for qualifying account activity.

Lastly, SoFi account holders can access over 55,000 ATMs nationwide without incurring out-of-network fees.

Drawbacks

As an online-only bank, you may not receive the personal attention associated with brick-and-mortar banks and credit unions.

Quontic

This national digital bank is highly rated by many common banking reviews and financial websites. It takes less than three minutes to open an account at Quontic.

Best rewards perks

Qualifying debit card transactions are eligible for cash back of up to $50 each month. You can open a Quantic account with as little as $100. Want to avoid carrying a purse or wallet? Quontic’s wearable Pay Ring has the same embedded technology as a debit card and allows you to pay for purchases anywhere you see a contactless payment symbol. Domestic wire fees cost $25, but aside from that, most common checking account services are free of charge.

Drawbacks

Best for people familiar and comfortable with online-only banking. Quontic doesn’t offer common banking products like personal loans or credit cards.

Upgrade

You can have an Upgrade Rewards Checking Plus Account up and running in minutes, and with a Visa-branded debit card, you can make purchases at countless retailers nationwide.

Best rewards perks

Upgrade offers 2% cash back when you use your debit card to pay for expenses such as fuel or streaming television services and 1% cash back on standard debit card transactions. Upgrade rewards account holders can also receive interest rate discounts on personal loans and credit cards.

Drawbacks

Cash back rewards are capped at $500 annually.

Finding the best rewards checking account may take a bit of searching. You’ll want to ensure the financial institution you choose offers rewards that pique your interest and that any minimum requirement targets you need to meet are within your reach.