Best Rewards Checking Accounts

Rewards checking accounts are normal checking accounts that reward you every time you make purchases or payments with your debit card. You earn cash back on all the purchases you make with your debit card. In exchange for these benefits, many rewards checking accounts charge you a monthly fee. This fee might easily outweigh the benefits you’ll receive if you make a lot of purchases with your debit card.

A cash back checking account allows you to accumulate cash rewards for every purchase you make with your debit card. Every time you use your debit card, a certain percentage of that transaction generates a cash reward that you receive at a later date—typically the next month. Unlike a rewards credit card, there are no additional charges associated with a cash back checking account. Your account is debited automatically for the purchase or payment price, which means you don’t have to worry about interest, late charges, or other fees in the future.

APY stands for annual percentage yield. This is the real rate of return that is earned on financial accounts where you hold money for long periods of time, such as savings or investment accounts. Rewards checking accounts typically have a very low, or no, APY because they are checking accounts. But remember, the upside is that you get the cash back bonus as a benefit. The rewards cash can pay you back a lot more over time if you use your debit card frequently compared to the normal APY on a checking account.

You typically don’t earn very much money just by keeping your cash in a checking account. If that’s your goal, consider opening a savings account or a more active investment account. If you have a rewards checking account, though, you could earn up to 1% of all your debit card purchases, depending on the bank and account you choose. Keep in mind, though, that some banks cap the amount you can earn to the first $3,000 you spend each month or require you to maintain a specific balance to get rewards.