Reward Checking Accounts

by Mr. Checking

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Banks are just like other businesses; they compete. In order to compete, they must have adequate resources, in their particular case–money. In order to have money to conduct their particular type of commerce, enticements in the form of rewards are introduced to bring in fresh amounts and new customers.

Times used to be that free checking was enough to bring in new depositors by the hundreds. The newest trend is to offer even heftier incentives. Free checking is still a nice draw but when the rewards for moving personal money actually earn money, it may be time to make a move.

Banks who successfully use these reward programs to increase their customer base have more opportunities to make money. Once a customer joins the bank, they are more likely to seek mortgages, auto loans, personal loans and use other banking options such as CD's. Their personal bank is usually the first and obvious choice for such transactions.

Giving the Little Guys a Chance

The more enticing rewards associated with checking accounts are offered by smaller regional or state banks. This allows the smaller banks to compete with large, national banks. Smaller can sometimes mean not as stable or strong as other banks. Investigating the bank's current health might be wise before investing. It is also a good idea to check into all the finer details that go along with a rewards checking account. Banking and spending habits may or may not be a good fit for an individual considering changing to a bank offering checking rewards. These reward checking accounts are, however, a great way to make sure the public has a good range of banking choices.

Banking Patterns and Habits

Many banks may require certain balances, check card usage, online bill pay or other features to be used at a certain consistent level. If the client's usage in any or all those areas falls short, there may be a penalty. High interest such as 3.25% on savings or checking may fall dramatically below that point if the customer fails to meet the requirements. If that is the case and the customer feels like they will consistently fall short of the mark on a monthly basis, it may not pay to jump to a new bank.

Automatic drafts of a bill or bills may be required. Paperless statements, high balance requirements, direct deposit can all be part of the rule requirements in order to qualify for the best rewards. Fitting into the mold of the bank's regulations of these programs can end up being profitable. If its a good fit for the client and for the bank, it becomes win/win for both.

Types of Rewards

Various banks can range widely in their incentives for reward checking accounts. Some offer no-strings-attached rewards for using their debit card. Often, these amount to giving points for the number of transactions or the amount of the purchase. These points will add up and can be exchanged for merchandise. Those who use debit cards very little may take a long time to qualify for even the smallest item. Others who are heavy daily card users can reap their rewards quickly and often.

High interest on checking or savings balances can be a customer draw. Those who normally like to keep a high balance can benefit greatly. Interest rates on these accounts can sometimes draw higher than standard savings account rates at other banks.

Certain banks will reward their new customers with a cash-back system. If the customer uses the online bill pay and uses the debit card at an acceptable rate for purchases, each debit card purchase may earn five, seven or even ten cents on the transaction.

It is a good rule of thumb to investigate, just as a good shopper might look for the best price on a car or television. Seek out all the information on the benefits that reward checking accounts offer. Determine if the benefits are going to be worth following the rules the bank sets. If the requirements fit and the rewards are good, it may be time to make the switch.

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