Best Rewards Checking Accounts for March 2024

Credit cards aren’t the only way to earn cash back

Fact checked by Betsy Petrick

If you prefer using debit cards over credit cards, you may find yourself suffering rewards envy, given the constant parade of ads and offers for cash back and travel reward credit cards. But earning points, miles, and cash back on your purchases doesn’t have to mean buying on credit. Checking accounts with cash-back debit cards do exist. You just have to look for them.

In the credit card industry, “rewards” is used to indicate a monetary bonus given on qualified purchases with the card. These rewards typically consist of cash back, airline miles, hotel points, and other travel bonuses.

It’s also important to understand and remember the specific rules and requirements of your checking account so you can maximize potential rewards. Violate any of the requirements and you may find yourself surprised by having no cash back at the end of the month.

Below you’ll find the top checking account rates available from our partners, followed by our complete ranking of the best rewards checking accounts nationwide.

Best for Low Balances: Discover Cashback Debit

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Like its popular credit card, Discover’s cash rewards checking account is similarly focused on a no-fee promise and an easy way to earn rewards. It’s a good choice for those who sometimes carry a low balance and whose monthly debit spending falls below $3,000.

• Cash back formula: 1% on all debit card purchases up to monthly limit. See website for details.
• Limits or restrictions: Rewards paid only on the first $3,000 of debit purchases each month (i.e., maximum cash back is $30 per month).
• Minimum balance: No minimum
• Features: An extensive network of over 60,000 ATMs nationwide, free checks, mobile check deposit, online bill pay, and the ability to freeze debit card.
• Monthly Maintenance Fee: None

Best for Those With Direct Deposit: LendingClub Rewards Checking

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LendingClub is ideal for those who receive at least $2,500 in direct deposits each month (or are able to keep their balance above that level at all times).

• Cash back formula: 1% on all qualifying debit card purchases
• Limits or restrictions: LendingClub places no limit on how much cash back can be earned in a month. However, rewards are only paid in months when a) the account’s monthly average balance was $2,500 or more, or b) at least $2,500 in direct deposits was received.
• Minimum balance: No minimum balance, but there’s no cash back if the above requirements are not met.
• Features: Unlimited ATM fee refunds worldwide, early direct deposit, free first order of checks, mobile check deposit, online bill pay, and interest paid on your balance.
• Monthly Maintenance Fee: None

Best for Heavy Debit Users: Axos Bank CashBack Checking

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Axos offers several attractive accounts including cash back and interest checking options as well as a savings account option that offers a rate higher than the national rates. With its generous cap on rewards, the cash back checking is a great choice for those who do all or most of their monthly spending with a debit card.

• Cash back formula: 1% on debit card purchases that require a signature
• Limits or restrictions: Rewards paid only on signature-based debit purchases, but the rewards limit is set at a lofty $2,000 maximum cash back per month.
• Minimum balance: $1,500 minimum daily balance in order to earn 1% cash back each month. If balance falls below $1,500, the cash back percentage drops to 0.5%.
• Features: Unlimited ATM fee reimbursement in the U.S., mobile check deposit, and online bill pay.
• Monthly Maintenance Fee: None

Final Verdict

Rewards for purchases are not limited to credit cards. Banks sometimes offer rewards programs for using debit cards tied to their checking accounts. Each of the banks in our list—Discover, LendingClub, and Axos—offer 1% on debit card purchases and no monthly maintenance fees. Each bank has different terms, however. LendingClub is a good choice for those who can afford the high balance required and want no cap on how much cash back can be earned. Discover has no such balance requirements, but it caps monthly rewards at $30. Axos has a higher cap—$2,000 monthly—but it also has a minimum balance that must be maintained to earn the full 1%.

Pros and Cons of Rewards Checking Accounts

Pros

• Rewards for debit card purchases

• Minimal fees

• May earn interest

Cons

• Rates are typically lower than savings accounts

• Minimum balance requirements may apply

• Rewards caps may apply

Pros Explained

• Rewards for debit card purchases: While rewards credit cards are common, rewards debit cards are relatively rare. But there are still quite a few options for earning cash back or points with a rewards checking account. 
• Minimal fees: Many checking accounts have no monthly maintenance fees and other perks like ATM fee reimbursement. Compare options before opening a new account to ensure fees are minimal. 
• May earn interest: Certain rewards checking accounts may also earn interest, and while interest rates may be relatively low, they can still help boost your balance. 

Cons Explained

• Rates are typically lower than savings accounts: While you might earn interest with a rewards checking account, chances are your rate will be lower than you’d get with a high-yield savings account. If you’re looking for the highest possible APY and don’t plan to use the account for daily spending, a savings account (or a CD) could be a better choice. 
• Minimum balance requirements may apply: Certain rewards checking accounts may come with fairly high minimum balance requirements. If you don’t meet the requirement, fees may apply. 
• Rewards caps may apply: Reward amounts may be capped in some cases. For instance, you may only be able to earn rewards on up to $2,000 in debit card spending per month. 

Alternatives to Rewards Checking Accounts

Money Market Account

Money market accounts (MMAs) combine features of savings and checking accounts. They often have relatively high APYs and come with debit cards and check-writing privileges, so you can use them for everyday spending. But monthly transaction limits may apply.  

High-Yield Savings Account

If you don’t plan to use your account for day-to-day spending, a high-yield savings account could be a great option. These accounts offer generous rates, often above 5%.

Check-Cashing Service

If you prefer not to open a new deposit account, a check-cashing service is another option. These services may offer cash in exchange for your checks, or provide you with a reloadable debit card to which you can add a balance. Check-cashing services often charge fees, which could be fairly high depending on the company you choose. 

Reloadable Debit Card

Reloadable or prepaid debit cards may be issued by a check-cashing service or as a standalone product. As their name suggests, you can reload the balance at a designated location or online and then use your card for daily spending. Be aware that you’ll generally pay fees to reload your debit card, depending on the reload method, and various other fees apply as well. See our picks for the best prepaid debit cards for some good options.

What You Need to Know

In the News: The Federal Reserve raised interest rates numerous times throughout 2022 and 2023 to cool high inflation. For its last four meetings, however, the Fed has held the federal funds rate steady, and signaled on Jan. 31 that the committee’s rate-hike cycle has almost certainly ended. While most Fed members expect two to four rate decreases will occur in 2024, the Fed has cautioned that it could be some time before the first cut is implemented.

Interest rate hikes and cuts may not impact your rewards checking account, but they could impact your savings account. If you don’t have one already, it’s wise to see if the bank you’re using for your rewards checking account offers a high-yield savings account. You could also see if it offers one of the best CD rates right now. Combined, these accounts could help you earn the maximum amount of money on the cash you keep at your financial institution.

Frequently Asked Questions

What Is a Rewards Checking Account?

Rewards checking accounts are normal checking accounts that reward you every time you make purchases or payments with your debit card. You earn cash back on all the purchases you make with your debit card. In exchange for these benefits, many rewards checking accounts charge you a monthly fee. This fee might easily outweigh the benefits you’ll receive if you make a lot of purchases with your debit card.

How Does a Cash Back Checking Account Work?

A cash back checking account allows you to accumulate cash rewards for every purchase you make with your debit card. Every time you use your debit card, a certain percentage of that transaction generates a cash reward that you receive at a later date—typically the next month. Unlike a rewards credit card, there are no additional charges associated with a cash back checking account. Your account is debited automatically for the purchase or payment price, which means you don’t have to worry about interest, late charges, or other fees in the future.

What Is APY?

APY stands for annual percentage yield. This is the real rate of return that is earned on financial accounts where you hold money for long periods of time, such as savings or investment accounts. Rewards checking accounts typically have a very low, or no, APY because they are checking accounts. But remember, the upside is that you get the cash back bonus as a benefit. The rewards cash can pay you back a lot more over time if you use your debit card frequently compared to the normal APY on a checking account.

How Much Can I Earn With a Checking Account?

You typically don’t earn very much money just by keeping your cash in a checking account. If that’s your goal, consider opening a savings account or a more active investment account. If you have a rewards checking account, though, you could earn up to 1% of all your debit card purchases, depending on the bank and account you choose. Keep in mind, though, that some banks cap the amount you can earn to the first $3,000 you spend each month or require you to maintain a specific balance to get rewards.

How Do I Apply for a Rewards Checking Account?

You can usually apply for a rewards checking account online. You’ll need to provide some basic personal information, such as your name, Social Security number or individual tax identification number, email, and address. If approved, you may need to transfer money into the new account to meet any initial minimum deposit requirements, usually within a specified period; otherwise, the account will be closed. 

Can You Get Rewards From a Checking Account?

Yes, certain checking accounts offer rewards, usually in the form of cash back or points from debit card purchases. If you’re interested in debit card rewards, compare what different banks offer to find a high-value rewards structure that fits your spending. 

Are Checking Account Rewards Taxable?

Like cash back and points earned from credit cards, debit card rewards are not usually considered taxable. Instead, they’re generally considered to be rebates or discounts.

What Banks Have Rewards Programs?

Many banks have debit card rewards programs, including Discover, LendingClub, and Axos Bank. Note that rewards programs are subject to change, and offerings may be different over time.

Methodology

We looked at nearly two dozen of the best rewards checking accounts nationwide and narrowed the list down to our top four accounts and our top four banks. We evaluated all the accounts on factors such as the total payout reward, how easy it is to earn the reward, whether you’re capped on the number of purchases that earn the reward, what the monthly fees are if applicable, what additional features the accounts have, along with any minimum balances or deposit requirements associated with each account. The limits and restrictions were an important piece to the puzzle in deciding which rewards checking might be best for you. 

Read the original article on Investopedia.