Savings accounts that can help you earn credit card rewards
If you’re already keeping money in a savings account, you may be wondering if those deposits can do more than earn interest. In some cases, they can. A handful of banks reward customers who keep qualifying balances by boosting the rewards they earn with eligible credit cards.
That doesn’t automatically mean it’s worth moving your savings, though. The best option depends on the interest you could earn elsewhere, how much you spend on your credit cards and whether you can meet minimum balance requirements. Here’s an overview of how these rewards programs work, plus how to decide if they’re a good fit.
What is a rewards savings account?
The term “rewards savings account” can be a little misleading since savings accounts typically do not earn credit card points, miles or cash back on their own. Instead, the phrase refers to banking relationships that let you earn more rewards with an eligible credit card when you keep money with the same bank.
Some banks offer credit card rewards if you maintain a qualifying balance across your savings and checking accounts, have eligible investment accounts or meet other requirements like setting up direct deposit. In other cases, your deposits may increase the value of the rewards you redeem rather than help you earn rewards faster.
Examples of savings-linked or relationship-based card rewards programs
Not all rewards programs work the same way. Some require you to keep a certain amount of money on deposit, while others look at your overall banking relationship or require direct deposit. Here are a few examples of programs to compare before deciding whether moving your savings makes sense.
BofA Rewards
Membership in BofA Rewards (formerly Bank of America Preferred Rewards) is based on your combined balances across eligible Bank of America deposit accounts and eligible Merrill investment accounts. As your balances increase, you can qualify for higher rewards tiers that boost the rewards you earn with eligible Bank of America credit cards.
Cards eligible for bonus rewards through BofA Rewards include the Bank of America® Customized Cash Rewards Credit Card, the Bank of America® Travel Rewards Credit Card, the Bank of America® Premium Rewards® Credit Card and more.
U.S. Bank Smartly rewards
The U.S. Bank Smartly program links your banking relationship with your eligible credit card benefits. Depending on your qualifying accounts and balances, you may be able to earn a higher cash back rate with the U.S. Bank Smartly Visa Signature® Card.
Currently, the card offers unlimited 2% cash back on all purchases, plus up to an additional 2% cash back on your first $10,000 in eligible net purchases each billing cycle when paired with a U.S. Bank Smartly® Savings account plus qualifying balances in U.S. Bank Smartly® Checking and/or Safe Debit account(s).
SoFi Plus rewards boost
SoFi takes a different approach. Rather than requiring a large savings balance, the SoFi Plus program is available to customers who meet qualifying direct deposit or other eligibility requirements and pay a monthly subscription fee.
Members can unlock enhanced rewards on the SoFi Credit Card along with additional banking benefits, making it an option for people who prefer building their relationship through regular income instead of maintaining a high account balance.
How to calculate whether the extra rewards are worth it
A rewards boost can sound appealing, but it doesn’t always leave you ahead. Before moving your money, compare the program’s total value rather than the rewards rate alone.
Start by estimating how much extra you’ll earn from the boosted credit card rewards based on your typical yearly spending. From there, use a savings calculator to figure out the interest you could earn by keeping your savings with your current bank and with the new account. Don’t forget to factor in any monthly fees, minimum balance requirements or spending caps that could limit your rewards.
A simple way to compare your options is:
Extra credit card rewards − lost interest − account fees = estimated net benefit
For example, if a relationship program helps you earn an extra $200 in credit card rewards but you give up $125 in interest by moving your savings, your estimated gain is $75 before taxes.
Finally, remember that savings account interest is generally taxable and some rewards programs limit how much bonus cash back or points you can earn. Also, a rewards boost is never a good reason to carry a credit card balance. Interest charges can quickly wipe out the value of any extra rewards you earn.
Fine print and risks to check before moving your savings
Before you transfer your money, take a close look at the program’s terms. A rewards boost may sound generous, but small details can have a big impact on the value you actually receive.
Fees and APY changes
Compare the account’s APY with what you could earn elsewhere. A lower interest rate may offset the extra credit card rewards, especially if you’re keeping a large savings balance.
Also check for monthly maintenance fees, minimum balance requirements and other charges that could reduce your earnings. Since savings rates can change over time, it’s worth reviewing the account regularly.
Reward caps and exclusions
Some programs limit the amount of bonus rewards you can earn or restrict which purchases qualify. Others require you to maintain a minimum balance or keep your accounts open for a certain period to receive or keep your rewards. Be sure you understand the requirements before moving your savings.
Deposit insurance
Finally, confirm whether your deposits are insured by the FDIC or NCUA and understand the applicable coverage limits. While eligible deposits at insured institutions are protected up to $250,000 per depositor, per institution, your credit card rewards are not.
You may also want to avoid keeping more cash than necessary at a single financial institution if it means giving up better rates or greater flexibility elsewhere.
Who should consider this strategy?
Linking your savings and credit card rewards can make sense, but that doesn’t mean it’s the right move for everyone.
This approach may be a good fit if you already keep enough money at one financial institution to qualify for relationship perks, pay your credit card balance in full every month and like the convenience of managing your banking and credit cards in one place.
On the other hand, you may be better off sticking with a high-yield savings account if your main goal is earning the highest possible APY or if you don’t want to worry about balance requirements and program rules. It’s also not a good strategy for anyone who carries a credit card balance. Interest charges can quickly outweigh the value of any extra cash back, points or miles you earn.
Bottom line: Compare total value before choosing a rewards savings account
A rewards-linked savings strategy can pay off, but only if the numbers work in your favor. Before moving your money, compare the account’s APY, fees, deposit insurance, balance requirements and potential rewards boost alongside the credit card’s terms and benefits.
Taking a few minutes to compare accounts and calculate potential earnings can help you choose the option that delivers the most overall value.
Frequently asked questions
No. The term “rewards savings account” typically refers to a banking relationship that can boost your credit card rewards, while a high-yield savings account focuses on paying a competitive interest rate on your deposits.
Yes, some banks offer relationship programs that increase the rewards you earn with eligible credit cards when you meet certain account or balance requirements.
The better choice depends on whether the value of the extra credit card rewards outweighs any interest you might give up by not choosing the savings account with the highest APY.
If the savings account is held at an FDIC-insured bank, eligible deposits are protected up to FDIC insurance limits. However, the value of your credit card rewards is not insured.
