4 benefits of a rewards checking account

You’re probably looking to stretch your dollars as far as possible. You work hard for your money, so it’s only natural to try to get the most out of your spend, whether that’s on your utility bill, your gym membership or the newest tech gadget that’s all the rage. While rewards credit cards have traditionally been the go-to for those looking to maximize their spend, there are also rewards checking accounts that allow you to earn cash back for your debit card purchases.

Unlike a cashback credit card, your credit score isn’t a factor when you open a rewards checking account. You also won’t have to pay (or accrue) interest on your debit card. Translation: Easier rewards and less risk.

“Rewards checking accounts can be a fantastic option for people who want to stay clear of credit cards,” says Neal Frankle, a certified financial planner and owner of Wealth Pilgrim, a financial planning blog. “You get the points without running up debt.”

As you look for new ways to spend with the ease and convenience of debit, consider the following rewards checking account benefits:

1. You earn cash back easily

Earning cash back is the most immediate, and probably the most gratifying, of the many benefits of a rewards checking account. Discover Cashback Debit allows you to earn 1% cash back on up to $3,000 in debit card purchases each month.¹ That means you can earn up to $360 a year in cashback bonus.

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Just think of all the ways you can put the money you get back to good use. You could save up and splurge on something special, like a date night. Or you could move your money straight to your online savings account to beef up your emergency fund. If you’re paying off student loans, or another type of debt, you could even use your cash back to help repay your loans more quickly and save money on interest. An advantage of a rewards checking account is that you can achieve other financial priorities through smart spending.

Even those who frequently charge to a rewards credit card may also see the benefits of a rewards checking account. Your debit card could be a good way to pay for everyday purchases (think lunch, transportation, latest tech accessories), and you can use it when a merchant has a minimum transaction amount required for credit cards. In either case, an advantage of a rewards checking account is that your debit card is earning you cash back as you keep up with your regular expenses.

2. You may be less likely to overspend

While cashback programs may be common for credit cards, if you don’t have a good credit history, you may not be eligible for many of the best rewards cards. And—because who’s not tempted to overspend occasionally?—charging to earn rewards can leave you accruing high-interest debt if your credit card comes with a high annual percentage rate. This could more than offset the rewards you receive.

One of the advantages of a rewards checking account is that it can make such costly overspending more difficult because you can only withdraw what money you have in the account.

“The beauty of a rewards checking account is that you never have to worry about going into debt,” Frankle says. When you make a purchase with your debit card, in most cases, the money gets pulled from your account right away. Conversely, with a credit card, you are charged immediately, but don’t have to pay until later.

Karen Cordaway, a personal finance blogger, says another benefit of a rewards checking account is that it can help you make better purchasing decisions.

“The balance in a checking account can set a financial boundary and make you live within your means,” Cordaway says. “I believe it keeps you more accountable and aware of what you can afford.”

If you try to overspend, crossing that proverbial “financial boundary,” the transaction will be declined. Or, if you have overdraft protection, money will be transferred to your checking account from a connected savings account to complete the purchase.

3. It could help you stick to a budget

You can get additional rewards checking account benefits if you think of your rewards checking account as a budgeting tool. Cordaway, for example, says that using a checking account and debit card could help you stick to your budget because you can easily review your account to track your spending, adjust your budget and find places to cut in order to save.

“If payday is a week away and you only have $100 left in your account, you’ll have to prioritize your spending and may choose to buy groceries instead of a new pair of shoes,” she says.

Although a benefit of a rewards checking account is that it can help you stick to your budget by closely monitoring your spending, don’t underestimate the need to think carefully before making a purchase.

“People with rewards checking accounts might still spend more than they should to rack up those rewards,” Frankle says.

4. You get the perks of online and mobile banking

Rewards checking account benefits may include an online portal and mobile app, which you can use to check your balance, initiate transfers or pay bills. You can also link your account to budgeting software if you want to take your budgeting skills to the next level. Budgeting programs can help you spot trends—like how much you’re really spending on after-work outings—that may not be as clear when you’re just scrolling through your checking account transactions.

Another example of a rewards checking account benefit is that the account may have fewer or lower fees. Discover Cashback Debit has no monthly fees or monthly balance requirements. Bonus: If your account is part of a large no-fee ATM network, you’ll gain even more access to your cash.

Compare rewards checking account benefits

While the advantages of a rewards checking account can be numerous, not all accounts have the same features.

Frankle recommends reviewing the account terms and features, as well as the associated fees and the bank’s customer support hours. This way you can base your decision on more than just one feature, such as a rewards program. Following Frankle’s suggestion when considering the benefits of a rewards checking account can help you find a rewards checking account that meets your financial goals.

¹ ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), online sports betting and internet gambling transactions, and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo^® and PayPal^®, who also provide P2P payments) may not be eligible for cash back rewards. Apple Pay^® is a trademark of Apple Inc. Venmo and PayPal are registered trademarks of PayPal, Inc. Samsung Pay is a registered trademark of Samsung Electronics Co., Ltd. Google, Google Pay, and Android are trademarks of Google LLC.