Typically, when you sign up for a checking account, you’re just looking for a digital bucket to throw your money into. Free checking accounts fill this role very nicely. Many banks and credit unions provide these simple, straightforward checking accounts that offer no interest on your balance and are just for paying bills and receiving direct deposits.
If you’re looking for something a bit more involved, however, you could be looking for a reward checking account. Reward checking accounts give you interest back on your balance, and many banks offer unique features to customers who have these kinds of checking accounts.
Some people prefer reward checking accounts over reward credit cards because they want to avoid debt. While credit cards can be a good idea if you’re good about paying them off in a timely manner, they can get out of control if you’re not vigilant about paying them back. Free checking accounts that offer rewards are a good compromise!
Cash Back Accounts
Some reward checking accounts offer cashback on purchases in a way that is similar to cashback credit cards. If you prefer to use a debit card to avoid credit card debt, then this is a great way to maximize your spending. Why not get some of the money you spend back from your bank?
The drawbacks of these kinds of accounts are that you might need to carry a higher minimum balance than on a free checking account. Just make sure you read the fine print and avoid any fees. Remember, monthly fees could eat into the rewards that you’re getting.
Ideally, you’ll want a reward checking account without an annual fee. Reward accounts with no annual fees are essentially a no-lose scenario for you if you prefer to use debit cards, as most credit cards do carry an annual fee you need to pay.
Interest on Checking Accounts
While savings accounts almost always accrue interest, most of us don’t expect to earn money from the balance in our checking accounts. However, some banks offer reward checking accounts with interest. For some people, these kinds of checking accounts don’t make a lot of sense; why would you want a checking account that pays interest when that’s the account that your money goes out of?
However, for people who tend to keep all of their finances in one account, this kind of checking account could be a great way to save money and earn interest. As long as you’re not paying an annual fee on this account, then this could be a good deal for you.