Rewards checking accounts might earn interest or provide a generous sign-up bonus, but some carry high monthly fees — think $20 or more — unless customers keep their accounts padded with an almost comically high balance or meet some other requirement.
Still, finding a rewards checking account that doesn’t have steep fees and requirements is possible. Here’s a look at how to qualify for one of these accounts — and whether you should even want to.
Rewards checking basics
Rewards checking accounts often come with excellent perks, such as:
- One-time sign-up bonuses between $50 and $200
- High annual percentage yields (often 1% or higher)
- Reimbursements for ATM surcharges
- Airline miles
- Cash back
Sometimes, the highest APYs are tied to balances. For example, you may earn a high rate only if you keep your balance under $10,000. Know the requirements involved, including what it takes to waive the monthly fee, in order to get the best deal.
How to qualify for rewards checking
Although the criteria to receive these benefits vary by account, generally you’ll have to meet a few requirements, such as:
- Making 10 to 15 debit card transactions each month
- Having at least one direct deposit or one ACH automatic withdrawal clear your account each month
- Using self-service options such as electronic statements, online banking, ATM deposits or online bill pay at least once each month
You may be asked to fulfill all of these requirements, some combination of the three or different ones altogether; keeping a minimum balance is another popular one. It depends on the account. Check to see what those requirements are, and ask yourself whether you could meet them on a regular basis.
» MORE: What is a checking account?
Is a rewards checking account worth it?
If an account truly is free, there isn’t much downside to choosing one that offers rewards as well. Even if you don’t qualify for any of the add-ons, you’ll still have a free account. That’s a win in and of itself.
Problems arise, though, if you find yourself straining to meet the monthly requirements to have fees waived. For example, by forcing more debit card transactions than usual, you may end up overstepping your budget and triggering an overdraft. In that case, the interest you’ve earned won’t make up for excessive spending and fees.
Rewards can play a role, but not the main one
There’s nothing wrong with having rewards sway your decision if you’ve narrowed down your search to two accounts that suit your needs. If that’s the case, then by all means go for the one that does more than just store your money.
But don’t let flashy rewards lure you into signing up for an account that could do more harm than good.
Updated March 20, 2017.