Rewards Checking

What Is Rewards Checking?

Rewards checking accounts offer perks, incentives, or other benefits to account holders when certain requirements are met. Perks may include higher interest rates than traditional checking accounts, reward points, ATM fee rebates and more. While not offered by every financial institution, you can find rewards checking accounts at a wide variety of banks and credit unions nationwide.

How Do Rewards Checking Accounts Work?

A rewards checking account functions much like a traditional checking account. You can use your account to receive deposits, make payments and withdrawals, transfer money and more.

However, rewards checking accounts come with additional perks and incentives. While benefits vary depending on your financial institution and the reward program, common added features for account holders may include:

• Cash back

• Reward points

• Higher annual percentage yield (APY)

• ATM fee reimbursements

• Welcome bonuses

• Waived overdraft fees

• Cell phone insurance

• Shopping discounts

How Do Account Holders Qualify for Rewards?

While reward programs vary, many require account holders meet certain thresholds each month, including:

• An average minimum daily balance

• Direct deposit minimums

• A minimum number of monthly debit card transactions

• Hold other accounts or use additional services

For instance, you can earn unlimited 1% cash back on Qualified Purchases made with your Happen Bank Rewards Checking debit card in months where you maintain an average monthly balance of at least $2,500 or receive at least 2,500 in Qualifying Direct Deposits.

However, some programs may impose limits on monthly rewards.

How Can You Benefit from Rewards Checking?

Rewards checking accounts can add value to your everyday money management without having to change your spending habits.

Benefits include:

• Earn with everyday spending. If you opt for a program that offers cash back or points on debit card purchases, you may be able to earn rewards on everyday purchases.

• Cost effective. Generally, rewards checking accounts don't charge monthly fees or high annual fees that often accompany rewards credit cards.

• Robust features. Rewards checking accounts typically offer other valuable features that can expand ATM access, save you money on ATM fees, provide extra value when you shop, and more.

What Is a Cash Back Rewards Checking Account?

A cash back rewards checking account is a type of checking account designed to keep you engaged with your bank that offers incentives, or rewards, on purchases made using your debit card. For instance, an account might offer 1% cash back on the first $2,500 in debit card purchases each month.

Cash back rewards checking accounts could be beneficial for those who tend to make most of their purchases using a debit card versus checks or cash.

What Are the Pros and Cons of Reward Checking Accounts?

While it may sound enticing to earn rewards for everyday spending and saving, rewards checking accounts can have both pros and cons.

Pros

• Earn rewards on your purchases or a high APY on your daily balance.

• Earn reward points or cash back on debit card transactions.

• Enjoy additional valuable perks like ATM fee reimbursements, welcome bonuses, and more.

Cons

• Rewards may be taxable.

• Account requirements may be difficult to consistently meet.

• Rewards may be capped.

How Do You Find the Right Rewards Checking Account?

There's no single best rewards checking account for everyone, so it's important to review your options to find the best match for you. Here are some steps you can take.

1. Determine the type of rewards you want.

   Since rewards vary by program, look for a program that offers benefits you prioritize, like a higher yield on your account balance or travel points to help pay for a future vacation.

2. Consider the requirements.

   If there's a minimum balance or direct deposit requirement, for instance, determine whether you can consistently qualify.

3. Review other account features and fees.

   Take a complete inventory of all the account perks and any potential account fees, including how fees can be waived.

4. Check for other products and services.

   If you like to have all of your banking under one (virtual) roof, look for a rewards checking account at a financial institution that also offers additional services you may want, such as high-yield savings accounts and personal loans.

Are Rewards Checking Accounts Worth It?

The answer depends on whether a rewards program offers benefits you appreciate and at terms that make sense for your financial situation.

For example, if you only want a high APY on your daily checking balance, you might not need additional bells and whistles like ATM fee refunds and reward points.

On the other hand, you may appreciate all the rewards a checking account offers, but not be able to consistently meet the minimum balance requirement.

When considering rewards checking programs, be sure to evaluate all of the features and requirements as a whole and not solely focus on the rewards.