Consumers no longer see bank accounts as just a place to store your money. Enter the rewards-like checking account concept. So, if you have ever been curious about what is a rewards checking account, the answer is surprisingly simple: a rewards checking account is basically a checking account that pays you back something for your normal, day to day banking activity. However, its functioning − and the benefits that it enables − are quite unlike a regular account.
What is Rewards Checking: A Working Definition
A rewards checking account operates just like any regular checking account. It allows you to pay bills, make purchases, withdraw cash, and deposit paychecks. That’s where the additional work occurs behind the scenes.
Instead of being idle, your account activity nets rewards, like higher interest rates, cashback, or reimbursement of certain fees. These are the perks that banks and credit unions offer their customers in order to encourage them to use their accounts and services on a regular basis.
And that, in a nutshell, is what a rewards checking account is all about: An account that rewards you for staying involved.
Why Rewards Checking Makes Everyday Banking Value-Added
The great part of this account is that rewards usually follow things you are already doing. No complicated point systems. No unusual requirements. Simple actions that provide you with access to rewards.
Common monthly activities include:
- Using your debit card for a specified number of times
- Having at least one direct deposit
- Using online banking or e-statements
- Maintaining your account in good standing
Your rewards start to roll in automatically when these conditions are met.
Types of Rewards You Can Earn
If you want to know exactly what is a rewards checking account, it also pays to check what you earn.
-
High-Yield Interest
Certain rewards checking accounts offer a dramatically higher interest rate on checking balances in excess of what a checking account typically pays.
-
Cashback
Instead of earning some money using a credit card with cashback, you would be able to do the same on debit card transactions.
-
ATM Fee Refunds
Utilize out-of-network ATMs − and get charged fees reimbursed at the end of the month.
-
Exclusive Banking Perks
Certain institutions offer bonuses such as overdraft protection or access to specific loan discounts.
Over the course of a year, these perks can total quickly.
Who’s the Best Fit for Rewards Checking?
These accounts can be a good fit for anyone who uses their debit card on a regular basis, but they are particularly suited for:
- People paid through direct deposit
- Anyone who’s team debit and not credit
- Get them a higher interest without needing to open specialist savings account
- People who hate paying for monthly maintenance fees
Because rewards checking is intended for common banking − not investing at the high level − it is relevant to a broad audience.
Final Thoughts
So, what, you may be asking, is a rewards checking account? It is a newer, feature rich take on the traditional checking account − one that pays you just for using it. It turns mundane transactions into tangible money because of its features like cashback, high interest, and ATM refunds. A rewards checking account can be a great first step for anyone who wants more from their banking.
