Comments on: Why You Need a Rewards Checking Account

By: 8 Budget Expenses You'll Probably Forget to Plan For

8 Budget Expenses You'll Probably Forget to Plan For — Mon, 21 Feb 2011 12:31:10 +0000

[...] unexpected incomeThis is one that I bet a lot of you forget. If you’re earning interest on a rewards checking account, savings account, or certificate of deposit the income you are paid comes without tax taken from [...]

By: Rosie

Rosie — Wed, 01 Sep 2010 14:18:10 +0000

Well we now are in our second reward checking account. I found that I did not have any problem last month getting the additional debit card transactions. I use it for a gallon or so at the gas station when I fill the can, when I get a loaf of bread, when I picked up something at the $1 store, picked up a chicken wrap. Last month they had all the school supplies on sale so I went from store to store to shop for the grandkids and picked up other things for my nieces and nephews. I had 25 debits for 1 to 3 dollars in the first 2 weeks of the month.

By: Karl

Karl — Wed, 01 Sep 2010 14:00:30 +0000

I am in the same boat as Golfing Girl, as I use my credit card for most of my purchases. Since the credit card transaction cost is built into the price of the good (2-3%) I see it as cheating yourself if you are paying cash.

Also, Kevin have you looked into the costs of meeting the transaction requirement versus the amount of interest earned per month? I would hope it would be a net gain. I get the feeling that many people are distracted by the high yield and don’t consider they are chipping away at it with each purchase.

If you or anyone else is interested there is a service made specifically for reward checking account holders that allows for scheduled micro-transactions. It’s called MicroMaximus

By: Kevin

Kevin — Wed, 17 Mar 2010 19:30:32 +0000

I completely disagree! The reason why? I am a hardcore AMEX and ING Direct user as well. That is the exact same setup we had.

Here’s the kicker: ING is paying what, 1.15% these days? So we dumped all of our money together into the “checking” account and just differentiate it on a spreadsheet. The money is still there, but it is earning a higher rate.

To have AMEX’s cash back beat out a 3 or 4% interest rate would mean you have a ton of charging and not a lot of money in the bank.

The past few years I’ve earned $400 or so per year from AMEX and that was with a lot of work lunch charges.

If we maxed our accounts out… that’s $900 in interest. I would have to more than double our AMEX spending — nearly impossible for us — to reach that amount.

Plus you can use the debit card for 10 small transactions then switch back to AMEX. This is exactly what we do.

It truly is the best of both worlds IF you have the cash on hand to earn interest on. If you don’t, then, well, that’s not good

By: Golfing Girl

Golfing Girl — Wed, 17 Mar 2010 17:43:28 +0000

Sorry–Devil’s Advocate here. As someone who uses a rewards credit card and a high interest online savings account, I cannot benefit from a rewards checking account. I simply don’t ever make debit card purchases, let alone 10/month. I use my credit card for everything so I can earn my 1.25-5% cashback. And my checking balance isn’t high enough to make a big difference in earnings. All my extra money goes into my ING account.

I’m pretty fastidious about my finances, but I guarantee I would forget to make 10 transactions after relying solely on my Amex card after all this time.

That being said, those without rewards credit cards and already using debit cards would benefit from this greatly and it would be worth the effort to look for such an account.

By: Rosie

Rosie — Wed, 17 Mar 2010 16:37:37 +0000

Have used a reward checking account for a few years. Went from paying 6.01% until Jan to 3.65%. Not hard to remember to use the debit card. My husband eats 3 bananas a day so I buy them a couple times a week. That is 8 times a month already. I stop at the $1 store for sympathy cards, or their Awesome cleaner or their Awesome spot rug cleaner or I stop for a chicken wrap on grocery shopping day etc. My 10 debits are done. My credit union also counts an auto debit so I have my credit card paid in full each month from their in case the retirement check goes in the last day of the month. This credit union also counts even a $10 transfer used with on line banking. They send me a couple of notices a month by email to let me know how many debits I have done also. I worked at a bank for 30 years. The credit unions are great.

By: Kevin

Kevin — Wed, 17 Mar 2010 02:14:05 +0000

Here’s a task: calculate how much interest you would earn versus how much you are currently earning. The annoyance of having to swipe the debit card 12 times will probably seem pretty small compared to the interest you could earn. Obviously that depends on your account balance, but if you’re smart and have a significant stash… why not?

By: Kevin

Kevin — Wed, 17 Mar 2010 02:13:02 +0000

That’s what happened with ours. 4.41% down to 3.61%. Still better than any other bank we could find!

By: Budgeting in the Fun Stuff

Budgeting in the Fun Stuff — Tue, 16 Mar 2010 20:49:06 +0000

I meant 3.01%, not 4.01%…oops.

By: Budgeting in the Fun Stuff

Budgeting in the Fun Stuff — Tue, 16 Mar 2010 20:40:14 +0000

I’m looking into First Community Credit Union for us right now since they have 4.01% rewards checking. We only hesitate since we don’t use debit and it would require 12 debits a month and a ACH credit (which would be easy).

That doesn’t seem like a big deal, but I really dislike debit cards…I’m so used to being able to see everything at once on my credit card statement and paying it off with one lump sum.

We’d also need to close our Smarty Pig accounts that are at 2% right now anyway.

I’d chalk it up to 70% debit card avoidance and 30% laziness. I’m still considering it though…