Considering all the benefits and rewards checking accounts can provide, they are gaining in popularity. Understanding what a rewards checking account is, and how to use one, can help put extra money in your wallet each month.
Simply put, rewards checking accounts are a type of checking account that provides rewards and incentives above and beyond what a traditional checking account would provide.
How Do Rewards Checking Accounts Work?
A rewards checking account functions like a standard checking account. The account owner will receive a debit card and can spend the money in their account as they please.
Money can be directly deposited into the account. Checking accounts provide a great deal of convenience and safety, as it’s risky to carry around a lot of cash.
However, a rewards checking account kicks it up a notch. In addition to all the benefits you receive on a standard checking account, a rewards checking account could provide the account owner with extra cash back, airline miles, waived ATM fees or even a greater APY (annual percentage yield).
What Makes a Good Rewards Checking Account?
With so many reward checking account options to choose from, what ultimately makes a good rewards checking account? We’ve distilled this list down to three key factors:
Cash Back, Rewards, Benefits
A rewards based checking account offers cash back or rewards, such as airline miles or discounts at retail stores, each time you use your debit card to pay for something. Finding a rewards checking account that offers the greatest cash back benefit, or the most attractive reward system, is certainly a major selling point.
Keep in mind, a reward can also be free checks, or waived ATM fees.
Convenience is really specific to the individual. Some people put a large emphasis on wanting their bank to have numerous physical locations, whereas others want a bulletproof mobile banking experience.
Make sure whatever bank you partner with, offers convenient options that fit your needs.
Annual Percentage Yield
The annual percentage yield (APY) is essentially the amount of money a financial institution will provide the account owner for having money in the account. If the rewards checking account pays a 1% APY, and the account owner has $5,000 in the account, the bank will give the account owner $50.
Finding a rewards checking account that provides an attractive APY is important!
Best Rewards Checking Accounts
We’ve reviewed many rewards checking accounts and narrowed our list down to 5 of the most popular options!
Discover is well known for their credit card options, but they also provide regular banking that is FDIC insured. Their cashback checking account is a popular option, and for good reason.
Unlike many banks, this online bank packs a serious punch!
The cashback checking account option from Discover is for anyone who is looking to earn cash back for their purchases.
The three main benefits of this account are:
- The account owner will receive 1% cash back on all purchases up to $3,000 per month. The cashback benefit is capped at $30/month or $360/year.
- There is an extensive network of free ATMs you can withdraw money from.
- The fee structure is absolutely minimal which helps keep more money in your pocket each month!
There are some downsides:
- Discover is an online bank. This is not a problem for many people, but if you deposit or withdraw cash often, this can present some challenges. These challenges can be overcome by a few extra steps, but could be a bit inconvenient.
- The account does not earn an APY.
Pricing Or Fees
There is a $0 minimum deposit to open this checking account and there is no monthly fee! Other fees, such as overdraft fees may exist depending on your account size.
All in all, the Discover cashback checking account is a solid option at 4 out of 5 stars.
With its headquarters in Boston Massachusetts, Radius Bank is rapidly growing! Although their physical presence is limited to the Boston area, they offer excellent online banking options.
Radius Bank caters to those that are comfortable banking online. They also offer a complete banking experience, including commercial banking and lending, so if you’d like to have all your banking in one place, this is worth looking into.
Radius Bank has a long list of benefits. Most notably:
- Access to over 325,000 ATMs where you can withdraw money and not pay a fee. If you happen to withdraw money at an ATM that Radius is not partnered with, they will reimburse the fee.
- There are no monthly fees!
- You can earn up to 1.5% cash back on purchases.
- Radius Bank provides an APY of 0.10 – 0.15%.
- Their online and mobile platforms are well respected for their ease of use and unique features.
Although the downsides are limited, they are important to note:
- There is a minimal physical location presence. If you like banking in person and do not live in the greater Boston area, this will be impossible.
- You need to maintain an average account balance of $2,500.
Pricing Or Fees
There are no monthly fees, but there are monthly account size requirements. These requirements are a minimum account balance of $2,500.
That can be steep to meet and puts this option out of reach for many people.
All in all, Radius Bank is growing rapidly and for good reason. If you can swing the $2,500, you’ll receive excellent benefits! We rank Radius Bank high at 4.5 stars.
TD Bank offers a great rewards checking account option. You can enroll in their checking account at one of their many retail locations, or you can set it up 100% online.
If you’re looking for a nice blend between in person locations and a powerful online banking experience, you may be pleased with TD Bank’s offerings.
There are many benefits to TD Bank. Here’s what most customers appreciate the most:
- TD Bank has many locations scattered throughout; Connecticut, Delaware, Florida, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, Virginia and even Washington D.C..
- Eligible customers receive a $500 bonus for opening an account.
- ATM fees can be 100% reimbursed.
- Customer service is literally around the clock, and their physical locations are open 7 days a week.
The downsides are minimal, but important:
- The ATM fees are only waived if the account balance is on average over $2,500 per day.
- Although TD bank has a strong physical presence in the states they represent, they are not in the majority of states.
- There is a $25 monthly maintenance fee.
Pricing or Fees
TD’s monthly fee is $25. This fee can be waived, but the account owner would have to meet strict criteria.
With all things considered, TD Banks rewards checking account option has a 4 star rating in our books!
AXOS Bank is an online bank with an outstanding rewards checking account option.
If you’re really looking to maximize your APY, look no further. AXOS Bank is one of the most flexible banks we’ve come across.
Per AXOS’s website, they received a 5 star rating in numerous areas because of their tremendous benefits. These benefits include:
- Zero monthly maintenance fees.
- Zero minimum monthly balance requirements.
- Unlimited domestic ATM fee reimbursements.
- An APY of up to 1.25%.
- Full service banking options including mortgaging, personal lending, business banking, and saving account options.
- AXOS Bank does not provide a physical branch to visit.
Pricing or Fees
AXOS Bank prides itself on their zero policy. There are zero monthly maintenance fees, overdraft fees, and they reimburse all domestic ATM fees.
Although looking past their lack of retail locations can detour sum, we still give AXOS Bank a 4.5 star rating.
Citi Elevate Checking
Citibank is a well known and respected bank. They offer an elevate checking account option, above and beyond a normal checking account.
Citibank is a great banking option for people who enjoy both the online and in person banking experience.
The benefits of a Citibank Elevate account are:
- There are over 700 retail locations within the United States.
- Account holders can earn up to 0.25% APY.
- A wide range of banking options.
- Waived ATM fees.
Downsides are minimal. The biggest deterrents would be:
- $15 monthly fee unless the account size exceeds $5,000.
- There is no cash back perk.
Pricing or Fees
There are no minimum opening deposits, but there is a $15 monthly fee unless the account value maintains a $5,000 daily average balance.
Given the $5,000 account balance to waive the fee, and the lack of cash back rewards, Citibank Elevate Checking gets a 3.5 star rating.
Have Your Money Work For You
Leveraging a strong rewards checking account is just one way you can have your money work for you. Earning interest, receiving cash back or additional perks will help keep more money in your pocket each month.
Working with a financial advisor is another great way to ensure you can not only keep more money in your pocket each month, but help that money grow. Financial advisors can not only help you identify which banking option is right for you, they can also help you identify where you should be investing your money.
They’ll get to know you and your goals, and will review your financial situation. Beyond that, they’ll develop a personalized financial plan that is aligned with your financial goals and lifestyle.
Working with a financial advisor helps make sense of the complicated world of money management!