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July 12, 2024

If you have a rewards credit card in your wallet, then you're probably no stranger to the perks available when you use it for everyday spending. The ease of earning miles, points, or cash back remains one of its most popular features. But what if you could experience many of the same benefits with zero interest charges or fees? You can when you use a debit card linked to a rewards checking account.

What is a rewards checking account?

A rewards checking account is like a regular checking account, but with added perks. For example, account holders may earn cash back when they use their linked debit cards to make purchases or they may earn interest on checking account balances. While there are different types of rewards, one thing these accounts usually have in common is that you will need to meet certain qualifications to receive rewards. As with any account, be sure to understand the qualifications before committing. While some rewards checking accounts will simply not earn rewards if you don’t meet qualifications for that month, others may impose fees (less common, but don’t let it be a surprise).

Unlike rewards credit cards, rewards checking accounts do not charge interest on outstanding balances, nor do they have annual fees. These account features could add up to extra savings that you can redirect to other financial goals, such as a big-ticket purchase or boosting your emergency fund.

What types of rewards can I earn?

Financial institutions offer different benefits for using a rewards checking account. Example rewards may include one or more of these perks:

  • Get cash back on debit card purchases
  • Earn interest on the balance in your checking account
  • Get reimbursed for ATM surcharges
  • Receive free checks

How is a rewards checking account different from a rewards credit card?

Rewards checking accounts might help you stick to your budget. Since you can only spend what you have in your checking account, you're less likely to spend beyond your means. If you don't have the cash in your checking account to cover the transaction, you won't be able to use your linked debit card to cover the purchase or earn rewards.

Credit cards allow you to spend regardless of your checking account balance. But, borrowing more money than you can afford to pay back can harm your financial health. Unless you can pay your purchases in full by the due date on your credit card statement, you risk paying added interest and late fees. Carrying more debt than you can handle can also interfere with your other financial goals since the increased debt may negatively affect your credit score.

Here are a few more key differences.

How do I know which rewards checking account is the right fit for me? 

Rewards checking accounts can give your finances a needed boost, but they're not one-size-fits-all. Before opening a new account, review your current spending habits.  

Make sure you can realistically meet the minimum requirements to qualify for rewards each month. For example, some rewards checking accounts let you earn rewards only if you:

  • Make a minimum number of debit card purchases each month
  • Receive direct deposits or other ACH transactions
  • Enroll in certain digital services such as electronic statements

Confirm whether the account supports your financial goals. If the account requires you to spend beyond your budget or doesn't fit with your lifestyle, it probably isn't a good match. There are other accounts that might be a better fit. Whereas if you tend to keep a high balance in your checking account, you may earn more by using an account that pays interest on the balance instead of one that pays cash back on purchases.

Compare checking accounts