Consumer affairs expert Rebecca De La Rose explains the merits of using checking rewards accounts
Opening a new banking account should provide you with somewhere safe to store your money and allows you to access it whenever you please.
Typically, on the other hand, people turn to rewards credit cards to take advantage of the rewards offered for making purchases, whether they are paying bills or buying a new outfit or electronic device.
These rewards credit cards may be ideal for some, but you could also make the most out of your money by opening a rewards checking account.
What is a rewards checking account?
A rewards checking account is different from a rewards or cashback credit card. Your credit score is not factored in when opening this type of account and you won’t need to pay interest on money spent. In short, you earn rewards for making purchases on your debit card using your own money.
With a rewards checking account, you don’t accrue debts of any kind. Instead, you earn points and rewards for any purchases you made using your debit card.
There are numerous perks that you may qualify for with these types of checking account. For reference, the typical perks that come with rewards checking at LetMeBank include:
– Sign up bonuses.
– Reimbursements for ATM fees.
– No monthly fees.
– Cash back on purchases.
– Low minimum deposits.
Qualifying for rewards checking accounts
Each financial institution offering a rewards checking account will have different qualification requirements, which you will need to understand before opening an account. General requirements include:
– 5 to 15 transactions every month.
– Direct deposit minimums.
– Opting in for E-statements.
You may be required to fulfil one or all requirements when signing up for an account, so be aware of the stipulations that go along with your rewards checking account. Before signing up, ask if you would be able to meet requirements each month or year.
The benefits of rewards checking
Rewards checking accounts can be beneficial, especially if you want to stay away from credit cards and debt. Some of the benefits you can look forward to include earning cash back, avoiding overspending, and managing your account online.
Earn cash back
Cash back for making purchases with a debit card can be utilised immediately – which makes spending seem a bit more pleasant. With most rewards accounts, you will earn a percentage back on all purchases made with the account. There will likely be a cap on the amount of money the percentage is applied to, but this reward option allows you to receive large sums back each month.
Purchase reimbursements can be used for any purpose you like – pay bills, go on a date, add to your emergency fund, etc.
Credit cards are mostly known for offering cash back programmes, but individuals that don’t have good credit may not qualify for many rewards. If you happen to overspend, the charges that are accrued for rewards can lead to debts with high interest rates if you have a high APR, or annual percentage rate.
A rewards checking account makes it difficult to overspend because you won’t be able to charge your card at an ATM – all the money you spend is money that is already in your account. You pay for items immediately instead of paying off your balance on a monthly basis.
Bank and budget on the go
Typically, any rewards checking account you open will provide you with the option to manage your account using a mobile app or an online portal. On these portals, users are able to check their balance, transfer funds, pay bills, and more. Budgeting apps and software can also be linked to these accounts, allowing users to budget their finances and spot trends in spending.
There are many advantages of rewards checking accounts, so you’ll have plenty of options when choosing which is best for you. Not every account is the same, so compare checking accounts to make sure that you are satisfied with the perks offered. You should also take other information into account, such as the terms and features of the account along with any associated fees.
Rebecca De La Rose is a writer and consumer affairs expert.