Tempted by extremely attractive interest rates, you decide to open a rewards checking account. It’s a single account that has the potential to replace your checking account, the hub of your financial transactions, and your savings account, the low-traffic storage area for your money.

However, rewards checking accounts usually limit the balance amount that can earn that high interest rate. Additionally, you have to spend money to be eligible for that rate, which means the balance that should be earning interest is falling.

For instance, a rewards checking account from Bank ABC offers a 3.00% APY on the first $10,000 in the account. To qualify for that rate, you have to post a direct deposit and make 15 debit card purchases every month. The portion of the balance that exceeds $10,000 will earn just 0.05% APY.

To ensure that every single dollar is earning a competitive interest yield, you should do your best to keep the balance at or around $10,000, while the rest goes to another account(s) that earns interest.

But when you have to make debit card purchases, you should decrease the rewards checking balance. Meanwhile, direct deposit and monthly interest earnings will increase the account balance.

So a rewards checking account can appear extremely attractive, but there are many fine details to consider if you want to maximize your interest earnings. We’ll give some tips on how to do just that.

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Simon Zhen

Simon is a research analyst for MyBankTracker. He is an expert on consumer banking products, bank innovations and financial technology.
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