It wasn’t too long ago that checking accounts were straightforward accounts. You moved in, deposited some money, paid the bills, and went along your way. These days, several banks give awesome benefits/perks for daily use. This leads to a very frequently asked question: exactly what is a rewards checking account, and is it even worth it?
The Short Answer
This is a reward checking account, which rewards you − generally in the form of cash back, points, or a higher interest rate − if you hit certain usage targets.
That means you are not rewarding yourself for saving up. They are being earned just for spending (and through an active use of the account).
How Rewards Checking Accounts Work?
The idea is simple. Banks prefer customers who keep transacting with them regularly.
In order to earn reward, you typically need to:
- Monthly debit card frequency obligations
- Sign up for online banking or e-statements
- Set up direct deposit
- Maintain a minimum balance
If you satisfy the requirements, rewards get activated, miss them, and the account functions like a regular checking account.
And that is the essence of what a rewards checking account is.
Why Banks Offer These Accounts
Banks want engagement. Engaged customers are worth more than unengaged ones.
Rewards checking accounts encourage:
- Frequent card uses
- Digital banking adoption
- Fewer branch visits
- Long-term customer loyalty
And vice-versa, customers get benefits for behaviors they already display. Losing that kind of interest is part of the trade-off for what is a rewards checking account from the bank or credit union perspective.
Who Benefits the Most?
Not all consumers will be suited for rewards checking accounts.
They work best if you:
- Use your debit card regularly
- Keep track of monthly requirements
- Prefer simple, automatic rewards
- Keep a minimum balance to escape charges
However, infrequently you use debit cards, or fail to remember account rules, rewards may be little or sporadic.
Potential Downsides to Know
It all sounds delicious and delightful until you set the conditional.
Watch out for:
- Monthly transaction minimums
- Balance limits on interest rewards
- Fees if requirements aren’t met
- Reduced benefits after promotional periods
Defining upfront what exactly a rewards checking account is worth to you is fundamentals.
Points-Based Checking vs. Cash Back Credit Cards
Although they are nothing alike, people often compare the two.
Key differences:
- Rewards checking is funded with your own money
- Credit cards involve borrowing
- Checking rewards are usually smaller
- There may be stronger protections through credit cards
Rewards checking is for the everyday spending we do without debt.
Things You Need to Consider Before Doing a No Buy Month
Ask yourself:
- Am I already able to fulfill the requirements naturally?
- Month to month, will you monitor the rules to the account?
- Is the sign-up bonus better than what you currently get?
If the answer to that question is yes, then rewards checking is a really smart upgrade.
Final Takeaway
Understand what a rewards checking account is all about. It is a way to reap rewards from money you already spend every day. It gains favorably if the requirement is in consistency with your habits. Otherwise, it just becomes another checking account. It is not in the promise − it is in how it fits into your routine.
