Maintain a Reward Checking Account and Get Huge Amounts of Interest on Your Money

Banks offer about 3 %-5 % interest on your checking account if you maintain it under their terms and conditions as the bank is going to benefit from it. Reward checking accounts are on the rise these days and you find about 600 credit unions and banks asking their clients to opt for them.

So what are the requisite criteria for you to open and maintain a reward checking account? Firstly, you’ve got to use the direct deposit mode of transactions. Secondly, you’ve got to make e-statements. Thirdly, you need to use your debit card at least a dozen times. If you don’t do this, interest on your account balance is going to be withheld for that month. Otherwise, these are the benefits that you get. You are going to get about 4 % interest on an average, on the initial $25,000 and 1% interest on the money beyond the first $25,000. Your ATM fees are also reimbursed by $25 every month. You don’t need to maintain a specified minimum balance. The rest of the functions are the same as any other checking account. Even the norms for the federal deposit insurance are also the same.

Using your debit card so frequently is an issue that I’d like to consider whatever the perks, I may get in return. I’m sure you’ll agree with me. Beats me! Why should banks offer you as high an interest rate as 4% for your checking account when other regular accounts fetch you a maximum of only 1.5 % ? Is that for putting your debit card to frequent work? The reason is by opting for a reward checking account, you are giving huge profits to the bank. Let us see how banks benefit from your reward account:

• Whenever you use your bank debit card, the bank gets a chunk of the Visa or MasterCard fees that credit card holders pay.
• The bank is able to attract new clients by offering new accounts on high interest rates. It does not have to pay higher interest rate4s on existing accounts for this.
• The bank also tries to make profits on forfeited interests of those account holders who don’t fail to meet the stipulated criteria. There are many account holders who may fail to meet in the stipulated criteria, particularly of using the debit card a dozen times, every month, and the company makes profits from the forfeited amounts. Most people are not able to meet the stipulations and they manage to get only 2 % interest rates.
• Huge amounts of money which is about 7 times the normal, is kept in reward accounts which the bank uses on various investments and loans. Reward accounts enable the bank to hold huge amounts of cash.

Who should opt for reward accounts? These accounts are not going to be beneficial for everybody. Such accounts should suit your financial lifestyle. Using the debit card a dozen times should be an effortless target for you to achieve. If meeting it is difficult for you, you should probably not go for the reward checking account.