Comments on: Pros and Cons of Rewards Checking Accounts

By: Christine

Christine — Sat, 14 Nov 2009 23:56:59 +0000

I LOVE my high yield checking account! And, I’m with No Debt Plan: smaller transactions go on the debit, larger ones on the Schwab 2% cash back card. I get 4.75% APY, so I junked my savings account. All the money is accessible, not locked like with CDs (and with a higher rate to boot). I also get ATM refunds.

By: Ryan

Ryan — Sat, 14 Nov 2009 15:50:45 +0000

That’s one way to do it!

By: Ryan

Ryan — Sat, 14 Nov 2009 15:50:22 +0000

Jim, the whole idea of giving people the higher rates is to create more loyal customers, especially people who will use the bank for everyday needs, including savings, loans, IRAs, and other financial accounts. It’s a great business move by the bank, but it also benefits customers. Win-win!

You also bring up a great point about interest and dividends. A steady stream of money is nice, and it’s important for growth.

By: Vivek

Vivek — Sat, 14 Nov 2009 05:20:58 +0000

The way I do my 10 transactions is during self checkout at the grocery store.
I average about $25 for 10 transactions per month.

Things like bananas, vegetables, milk, etc. are good for this. Since I scan and pay at the self-checkout, I can do one item at a time in one trip and get done with the requirements. Direct deposit is automated $1 per month.

So, all in all, I get about $50 per month for 20 minutes extra during checkout, I hope I would get that rate at my job

By: Jim Juber

Jim Juber — Fri, 13 Nov 2009 19:29:22 +0000

Last Feb, I opened an account at a credit union and they were offering the high yield checking account. 6 months early, I had just moved to the city and wanted a local bank. I was gonna use the credit union account as an emergency fund account seperate from my everyday account that paid the bills.

In my opinion, the minimum debit card transactions almost forced me to use them as my everyday bank, along with the direct deposit. Finding 10 transactions a month was not to difficult for me: gas, groceries, lunch and dinner.

I have managed to save quite a bit in the account, around 15k. Every month, I look forward to the interest payment. Last month, it was for 38 bucks and i’m expecting to crack the $40 barrier this month. Right now, $40 pays my electric bill for the month. I assume that is what retirement will be like, living off the “funky dividends”.

By: Jackie

Jackie — Fri, 13 Nov 2009 18:34:46 +0000

I’ve been tempted by some of the high yield checking account offers, but so far I’ve decided against them because they do seem to have so many little requirements in order to make sure you earn the interest. I’d be afraid of missing a requirement and then not earning even what I can get in my online savings account.

By: No Debt Plan

No Debt Plan — Fri, 13 Nov 2009 01:46:23 +0000

I guess I must be weird because I do both the rewards checking and the rewards credit card thing. (Thanks for the link, by the way.)

We try to use our debit card for the 10 smallest transactions each month, and the rest go on the credit card. It’s the best of both worlds

The interest on $25,000 at 4% is $83.33 per month. Compare that to the 1.3% my ING account is paying right now ($27.03 per month). That’s a win of $56.30.

Maybe that is small change to some of you, but to me that’s over $600 per year and we aren’t changing our habits much. I already used direct deposit, and now we just swipe a different card 10 times and the higher interest pays for it.

Hope that sheds some insight into why I use it!

By: Senan

Senan — Thu, 12 Nov 2009 23:16:26 +0000

Banks make the vast bulk of their money by lending the stuff out. So when your money is attracted into the bank by the account yield, the back office puts it to work in other ways.