Rewards Checking Accounts - Free High Yield Checking with Activity Requirements

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Rewards checking accounts provide their holders with a premium interest rate, a free checking account, and often ATM rebates in return for the owner undertaking certain activities specified by the bank.

Rewards checking accounts provide their holders with a premium interest rate, a free checking account, and often ATM rebates in return for the owner undertaking certain activities specified by the bank. In general, these activities include all or a combination of the following activities each month:

  • Using a debit card a certain a minimum number of times.
  • Signing up and paying bills online.
  • Setting up a regularly occurring direct deposit or some other form of electronic deposit (social security payment, etc.).
  • Receiving electronic statements.

Rewards Interest Rates

The rewards interest rate is usually offered up to a certain maximum balance. The rate can be substantially higher than the interest rates offered on savings and money market accounts and even CDs. For example, at the time this article was written (Feb 2013), Hope Community Credit Union offered a rewards checking account that paid 3.51% APY on balances up to $10,000. The top 5 year CD rate in the country based on BestCashCow during the same period was 2.27% APY. To receive that rate, an account holder needed to:

  • Have at least 12 check card purchases post and clear (ATM usage does not count toward the 12 purchases)
  • Have 1 Automatic Payment or Direct Deposit post and clear
  • Receive account statements electronically
  • Sign in to online banking account at least once

For someone looking for a bit more extra yield and who doesn’t mind performing the various requirements, the extra yield can be significant.

Find a Rewards Checking account near you.

Based on BestCashCow data, the best interest rate balance limit is usually $10,000 - $25,000. Deposited funds above that balance receive a second, often lower rewards rate. If the conditions of the rewards account are not met, then the account reverts to a non-rewards rate that is often comparable to a regular checking account, which means very little to no interest is paid.

Other Account Features

Besides the higher interest rates in return for performing certain activities, rewards accounts function much like standard checking accounts. They provide debit cards, online banking, access to ATMs, and often mobile banking. One other advantage of reward checking accounts is they often have no minimum required balance and do not charge monthly fees. In addition, because many of the banks and credit unions that offer rewards checking accounts are small, they often do not charge and even reimburse ATM fees at other banks.

Benefits of a Rewards Checking

Rewards accounts come with several benefits:

  • High interest rate on funds below the reward balance limit.
  • High rate but the funds are liquid and can be withdrawn at any time.
  • Often no minimum balance requirements or monthly fees.
  • Generally, reimbursements on ATM fees from other banks.
  • General account features like debit card, online banking, and  online bill pay.

Drawbacks of Rewards Checking

  •  Deposits that can earn high interest are often limited to between $10 - $25,000.
  • Smaller banks and credit unions often offer rewards checking and some of them may not be local.
  • Depositors need to maintain the account requirements or the interest rate goes almost to 0%.
  • Because many accounts require direct deposit, the checking account has to become an individual’s prime account most of the time. 

Find a Rewards Checking account near you.

Sol Nasisi
Sol Nasisi: Sol Nasisi is the co-founder and a past president of BestCashCow, an online resource for comprehensive bank rate information. In this capacity, he closely followed rate trends for all savings-related and loan products and the impact of rate fluctuations on the economy. He specifically focused on how rates impact consumers' ability to borrow and save. He also has authored a wee

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