Anyone Use a Rewards Checking Account?

In case you haven't noticed, cash investments earn about nothing these days. As such, many people are looking for ways to make the best return possible on their cash and wondering what they can do to earn more than a paltry 0.5% or so. Well, enter rewards checking.

MSNBC details some rewards checking offers by regional and local banks. Of course the specifics vary from bank to bank, but you can earn up to 5% (yes, 5%!) on your money. How? Here's an example of the things you'd have to do in order to participate in one rewards checking plan:

• Make 10 to 12 debit card transactions a month.
• Accept electronic rather than paper statements.
• Set up direct deposit or at least one monthly automatic payment.
• Log on your account online.

If I could find one in my area, I'd be all over it! We already do the last three (I'd just have to change my direct deposit account) and I could easily make 10 to 12 transactions per month on a debit card (I'd keep them in the lower-price level so as not to impact my credit card rewards.) I'm going to have to start looking around -- 5% is nothing to sneeze at.

Or maybe it doesn't have to be in our area. Here are two lists of rewards checking accounts -- many of them offering accounts nationwide.

Anyone have one of these accounts? What do you have to do each month? How much do you earn?

Comments

[Dan Herman]

I use a couple different rewards checking accounts right now. It's a bit of pain, but for a little bit of work it's guaranteed interest. I have one that gives me 4.25% and what I do for the 10 transactions is go to a gas station late at night and pump 10 transactions worth of gas each costing between .10 to .20 cents. It's a bit annoying/embarrassing but since it is late at night no one is waiting to use the pumps so it's not so bad.

[MyFinancialObjectives]

I use Wachovia's Way2Save program. 4.8% interest for the first year, plus a 4.8% bonus at the end of the year on whatever you have in there. I turned $1200 into $2000 this way, SUCH an amazing program, my first year is up, but I still use it and loved it! Still getting 1.5% interest now... I wrote a whole post about it, really I'm serious it's an EXCELLENT program!!

[Dan Herman]

That Wachovia accounts 5% sounds great, but I just looked at the fine print and saw this:

How much can I transfer through a recurring, automatic transfer into my Way2Save® account each month?
You can transfer up to $100 per month into your Way2Save® account through a recurring, automatic transfer.

Which means in a years time the max amount you can put in is $1200. Is that right? If so, it doesn't work for me. I thought it was weird where there is no mention of a max amount that the 5% is applied to. Usually there are caps at 25k or 35k or something like that.

[Dan]

FMF- Lake Michigan Credit Union has a rewards checking account: https://www.lmcu.org/max-checking/default.aspx $15k max though...

[BibleDebt]

It seems like to much of a hassle to me. As soon as you get settled in and used to it, they are likely to change the rates and you will be in the same boat you are in now.

Not that it makes a huge difference, but you can get 1.1% in an on-line savings account such as ING Direct or HSBC Direct.

[Eric]

I hopped on my local one a year ago and they haven't changed the rate at all. Still earning over 4% and it's easy money really. The only hassle is the transactions and the easiest thing for me is to schedule 10 small payments to my internet bill online. Make it recurring and it's almost set it and forget it type thing.

The gas pump thing just seems annoying to me but whatever floats your boat. My cap is 25K and I made over $500 in interest so far. Not bad at all considering "high yield online banks" are a joke these days.

[Alan]

I use a rewards checking account. I have to have direct deposit and e-statements, plus make 12 debit card purchases each month. I normally just use my debit card to buy the things I would normally, but if I'm a couple short near the end of the month I'll go pump a dollar worth of gas or buy an MP3 from Amazon or something. Assuming I meet their qualifications, I earn 4% on the money in the account and my CU refunds up to $25.00 of ATM fees each month. The rate used to be 5%, but it still beats a high yield savings account.

[Olivia]

I get 6%--YES, 6%--at my local credit union. We have had the account for about a year and the rate has not changed. We absolutely love it! We get between $30 and $60 a month in interest depending upon how much we have in our account. We have to make 10 debit transactions, get our statements online, and log onto our account once a month. There has only been one month we did not get our 10 debit transactions. Even when you don't get enough for the 6%, though, you still get the interest rate for the normal checking account for the month. Rewards checking accounts are definitely the way to go right now.

[FMF]

Thanks, Dan. I'll check it out...

[BillV]

I don't know seems like a lot petty buying to me too. MB bank is Chicago offers one for 4% but up to 10,000 limit. I realize <400 is not nothing but still not a ton of money.

I have to see where I can do all the transactions. I'm not pumping 10 cents ten times at midnight. (no offense)

[Mike]

You don't really even need to be near a branch of those banks most of the time. A lot of them allow you to sign up online. I have one that is 30 minutes away from me, so I just deposit any checks or cash I have to at my local Bank of the West (only local bank that allowed online ACH transfers) and then ACH transfer the money over to my rewards checking account. Working great so far!

[Anthony]

I'm earning 4% through my CU. I have a 10 transaction requirement on mine. Really though, after paying my water/sewer, cell phone, TV/phone/Internet, gym membership, and medical bills, that takes care of 5 or 6 of those transactions. I usually pump gas twice a month and buy groceries twice a month. I get 10 transaction quite easily. I usually have about 30 transactions during the month.

I think rewards checking is a great way to earn money right now. And also, I'm disciplined enough to hold a reserve in my checking account as an emergency fund.

[Eugene Krabs]

I currently have 3 checking accounts... Yeah, I know. Way too many. I'll slim it down soon enough.

One of them is Wachovia's Way2Save. I got $50 bonus signing fee for simply opening the accounts with them, so I figured why not. Anyways, yes, you can only transfer a maximum of $100 a month to the savings program, but you can combine that with their debit card program.... I think it's like $1 transferred to savings for every non-debt transaction, but I'm not sure because I don't use this part.

Instead, I also have PerkStreet, which pays me up to 2% in reward dollars for all non-debit transactions that goes through them. Not only that, but I signed up during a time when they were offering $50 for opening the account, $5 for the first non-debt transaction, and $100 for signing up direct deposit. The reward dollars can be transferred to Visa gift cards, so they are good practically anywhere. I'm still using this, and like it so far.

Finally, I also have a checking with a local credit union that, right now, pays up to 3% APY for 12 transactions a month. I've had them for years, and it gives me convenient access to local branch services in case I ever needed one for some reason....

So, for everyday finances, I use my credit union for saving, and PerkStreet for spending. It's working pretty good so far. I plan on closing my Wachovia accounts when the 5% interest rate runs out. I probably didn't need to enroll this in the first place but I guess I just couldn't pass up even $50 in free money.

[jclimber99]

SmartyPig is paying 2% right now, not bad for a savings account.

I do have a rewards checking account that pays 4% up to 50k, it's great! Not a big deal to get the 10 debit transactions, usually just small food purchases. I did have to drive 4 hours away to sign up for this account, but one month of interest completely paid for the trip (plus I got to visit an old friend for a day).

[Mark C]

I just signed up for SunTrust BillPay for $100 credit, even though my main bank is Charles Schwab. I have to pay three bills x three months to get the money. New customers can get $150. You don't have to keep the service after you get the credit. That's a LOT of free money!

[jclimber99]

This is a better source for rewards accounts:

http://www.depositaccounts.com/checking/reward-checking-accounts.html

It shows both national and local availability.

[jim]

The rewards accounts are offered by credit unions in our area for a few years now. My wife has one and it works fine for her. THe only problem I see with them is if you aren't able or forget to do the 10-12 debit transactions then you end up with 0% interest for that month. If you don't have a ton of money in an account then it may not be worth it to go out of your way to do 10-12 transactions for a couple % extra interest. But if the interest gain is worth it and you can do the debit transactions regularly enough then they are a good deal I think.

[Tim Russell]

I use First Arkasas Bank and Trust, 3.5% up to 35K. (It was 4.35% when I signed up). I might move banks seeing that I can get up to 5% now.

Try CheckingFinder.com as another place to find these accounts.

[Budgeting in the Fun Stuff]

We don't use debit cards, so we didn't look much further into First Community Credit Union, but it is at 3.6%. It requires at least one direct deposit, 12 debit transactions, and online statements. I believe it's 3.6% up to $25,000 and 1.5% for anything over that.

We do use Smarty Pig, which is at about 2%. It's easy and didn't require us to use a debit card...although I kind of liked the idea of 12 tiny transactions at the gas pump. :-)

My husband thought about going into a CVS when it's not busy and buying 12 packs of gum (or gummy bears for me). We picked Smarty Pig out of laziness.

[threadbndr]

Both of the credit unions I belong to have them - work and my mom's work (I've been a member there since I was 11). I use the one at work - paycheck direct deposit and 12 transactions and 1 ACH. I have my life insurance drafted for the ACH and use the debit card transactions for groceries, gas, spending money. My rate is 4.5% with an upper limit is 45K, anything over that has a 1% rate.

In order to get the most out of one of these, you have to be disciplined enough to not spend them down - it's the excess that gets the interest flowing. I've just started building that excess up - I actually divide that account 'on paper/spreadsheet' into three 'buckets' - E fund of one month's expenses, escrow for vet bills, car and house repairs, etc and current spending.

One trick that my mom taught me is that if you have an account like this that serves multiple purposes - use a different check register for each 'bucket' (or list them on different tabs on a spreadsheet). Still easy to reconcile - just add the totals together and compare to the bank statement. Keeps you from spending the 'vacation' fund on 'groceries' and vice versa.

[Meghan Fife]

I don't have one of the ones on the list but one in Oklahoma is Tinker Federal Credit Union. They offer a rewards checking account called, "Click Checking." Right now the rate is 3.25% I think. I have this but unfortunately I still keep much of my savings in a lower rate account simply because I need to keep it "out of sight."

But for those who can keep it in there without spending it, it's awesome!

[Ben E.]

To take care of the transactions, I have my church automatically withdraw $0.10 every 3 days. I have automatic transfers from my FNBO account to deposit into my high yield checking account to take care of the direct deposit requirement. Runs like clockwork...

[Eric]

Ben, doesn't your church have to pay a merchant fee ($.40 or $.50) every time they charge your debit card? That is the main reason I don't want to sign up for 1 of these accounts. It's not only embarrassing to charge 1 item 10 or 12 times but it is also not right to make the store (or in 1 guy's case the gas station) pay a $.40 fee for a $.10 transaction. Does anyone else see another way to reach the 10 or 12 transactions without sacrificing much in potential credit card rewards and not costing the merchants ridiculous fees?

[Dan in GR]

I'm a big proponent of rewards checking accounts. I reported $1800 in interest on my 2009 tax return entirely from rewards checking accounts. If you're disciplined with your debit card, rewards checking accounts can be one of the best places to keep your emergency funds. I know of no other vehicle for your money that is as liquid and pays as good of interest.

FMF-
I also live in Grand Rapids. Last year I had $25K at a lakeshore credit union called United Federal CU (I qualified to join because I work in Muskegon). They were guaranteeing a rate of 6% for a long time up until 2010 but have since dropped their rate to 3.65%. I also had $15k at Lake Michigan CU at 5%, now dropped to 4%. (Anyone in the nation can join LMCU online at www.lmcu.org) My wife and I each have accounts at Community West CU (www.communitywestcu.org) in Kentwood which is still paying 7%, but with a $2K balance cap. However, they only require 1 debit transaction per month, so its pretty good. Most companies allow you to direct deposit to multiple accounts, so that's how I manage all this.

Also, a tip if you find getting enough debit card transactions difficult: Break up your purchases from a trip to the grocery store into several transactions, or do a few gallons each on separate transactions when you pay at the pump.