Reward checking accounts: What are they and who should get them?

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Checking accounts aren’t just for paying your bills. They can also reward you with cash back or help you earn interest on your balance. The best checking accounts might even do both.

Checking accounts with perks like these are known as rewards checking accounts. While you could find better cash back opportunities with a credit card, you may prefer to use a debit card to avoid accumulating debt or because you didn’t qualify for the credit card you wanted.

Here’s everything you need to know about rewards checking accounts.

What is a rewards checking account?

A rewards checking account is a checking account that lets you earn cash back on your debit card purchases. Rewards checking accounts may help you earn interest on your balance. In contrast, a standard checking account typically doesn’t offer interest. Even if it does, it’s probably a very low APY. A standard checking account also doesn’t usually let you earn cash back when you make debit card purchases.

A rewards checking account may have both of these perks — offers cash back and pays a higher yield. The account could also reimburse out-of-network ATM fees.

Who should use a rewards checking account?

If you use a debit card to frequently make purchases, you may want to earn cash back through a rewards checking account. But a rewards checking account may only offer a high-yielding feature and not offer cash back. Compare the APY to make sure you’re getting a good deal.

No matter what the special feature is on the rewards checking account, make sure you’re not paying a fee on this account. A fee cuts into any kind of rewards that you’re earning.

Best rewards checking accounts 

The best rewards checking accounts give you either cash back on debit card purchases or a high APY on balances.

Bank Cash back percentage APY
Discover Bank 1% cash back on up to $3,000 in debit card purchases during each month N/A
Radius Bank 1% cash back on purchases made with a debit card 0.15%
Meriwest N/A 2% on balances up to $15,000
All America Bank N/A Up to 1.60%

The pros of using a rewards checking account:

Offers perks 

Helps you earn cash back for using your debit card to make purchases. If you’re using a debit card without earning cash back, you may be missing out.

You won’t usually pay annual fees

A rewards checking account is unlikely to have an annual fee, like a credit card could have.

Earn interest

You may be able to earn interest on your balance in this account. This interest rate may be tiered or capped depending on the balance.

The cons of using a rewards checking account:

Limits on perks earned

A bank or credit union may cap the cash back you can earn. It may also limit the balance that you can receive a high APY on and then offer a significantly lower APY on your remaining balance in the account.

More perks elsewhere

Some credit cards may offer a higher amount of cash back than a rewards checking account.

Barriers to entry

You may need to keep a higher minimum balance in a rewards checking account than other accounts, or you might need to have a direct deposit set up for this type of account.

Watch out for fees

Read the fine print to make sure you won’t have to pay a monthly fee or that you can easily avoid that fee. Also, make sure you understand how to qualify for the top rewards.

Bottom line

If you frequently use a debit card, a rewards checking account may be a good option for you. But read the fine print first.

Featured image by Jose Luis Pelaez Inc of Getty Images.

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Written by
Matthew Goldberg
Consumer banking reporter
Matthew Goldberg is a consumer banking reporter at Bankrate. Matthew has been in financial services for more than a decade, in banking and insurance.
Edited by
Banking editor