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Fed Meeting Preview and Deposit Rate Forecast - January 24, 2023Important Gotcha for Those with Reward Checking Accounts
POSTED
ON BY Ken Tumin
The most troublesome reward checking requirement is meeting the number of required debit card purchases for each monthly cycle. If you're late in making those last required debit card purchases, you may not meet the deadline. A reader emailed me about his experience, and it shows the risks of waiting too close to the end of the cycle. Here are excerpts of his email:
If you're near the end of the cycle, a good tip is to make PIN-based purchases instead of signature-based purchases. This assumes that your bank accepts PIN-based purchases for meeting the requirements. Some banks only allow signature-based purchases since banks make more money on these transactions.
As the reader described, even a PIN-based purchase may not post immediately even if it's made during a business day. The funds may be debited from the checking account, but the posting date could be delayed. So you may find that you will be late in meeting your reward checking requirements.
I've found some information that explains how debit card purchases are processed at this website of the Federal Financial Institutions Examination Council's (FFIEC). Here's an excerpt that summarizes how debit card purchases are processed and when the settlement occurs. Perhaps the settlement time explains the delay.
If you have more information about the time it takes for the different debit card purchases to post in your account, please leave a comment.
The reader reported that the bank finally relented and gave him the reward interest rate. So this also shows that if you think your bank was wrong for not paying your reward interest rate, make sure you contact your bank and don't give up too early.
For more information about reward checking accounts, please refer to this overview of reward checking.
I'm currently having a problem with a 'rewards checking account' that relates to the record date of transactions -- i.e., whether these posted during the 'qualification' cycle. Although it seems to me the evidence based on transaction dates shows that I'm clearly 'in the right' so far I am not making any headway with the Bank.
...
even though the 'debit' usage immediately debits the account for the funds in question, it appears that some banks do not always use that date as the posting date. It seems to me that should not be the case, and that in general 'posting dates' should not be left to the arbitrary discretion of banks.
If you're near the end of the cycle, a good tip is to make PIN-based purchases instead of signature-based purchases. This assumes that your bank accepts PIN-based purchases for meeting the requirements. Some banks only allow signature-based purchases since banks make more money on these transactions.
As the reader described, even a PIN-based purchase may not post immediately even if it's made during a business day. The funds may be debited from the checking account, but the posting date could be delayed. So you may find that you will be late in meeting your reward checking requirements.
I've found some information that explains how debit card purchases are processed at this website of the Federal Financial Institutions Examination Council's (FFIEC). Here's an excerpt that summarizes how debit card purchases are processed and when the settlement occurs. Perhaps the settlement time explains the delay.
Both credit and signature-based debit card transactions are processed in batch mode at the POS [Point of Sale], and settlement is delayed until the batches are processed at the end of the day. PIN-based debit card transactions, although processed in real time at the POS, typically settle at the end of the day using the ACH.
If you have more information about the time it takes for the different debit card purchases to post in your account, please leave a comment.
The reader reported that the bank finally relented and gave him the reward interest rate. So this also shows that if you think your bank was wrong for not paying your reward interest rate, make sure you contact your bank and don't give up too early.
For more information about reward checking accounts, please refer to this overview of reward checking.
December-09 11/30/09 12/30/09
January-10 12/31/09 01/28/10
February-10 1/29/10 2/25/10
March-10 2/26/10 3/30/10
April-10 3/31/10 4/29/10
May-10 4/30/10 5/28/10
June-10 5/31/10 6/29/10
July-10 6/30/10 7/29/10
August-10 7/30/10 8/30/10
September-10 8/31/10 9/29/10
October-10 9/30/10 10/28/10
If a certain RCA is filled with smart customers who do requirements like clock work, this RCA is bound to change rate drastically or even close their offer; as witnessed more and more recently.
The least we can do is to do some generous debit transactions; not eh cheap-shot $1 ones or even a few cents ones.
For all of the RCAs, I try to make my purchases at least a week before the (expected) deadline.
BTW-Thanks to the crybaby in the post. We need people like you to keep these RCA's around.
If you don't meet the requirements one month chalk it up to experience and a cheap lesson in not procrastinating the day of your charges.
Samsclub gas is my favorite place to knock out a bunch of transactions. Ive done 15-20 at a time and their pumps have never shut me down.
One of my accounts is down to 2.53% so I plan on closing that one. Its just not worth the trouble for that much extra. Might just stay at 3 accounts. One with $100k, one with $30k and the other with $25k. All 4%.
The bank requirement is 10 debit card transactions. They're telling me I had 9, because my PayPal transaction does not count, since apparently PayPal processes check card transactions as ATM and not POS transactions. There is nothing about this distinction on the bank's website where account requirements are listed. The site just says you need to make "10 check card transactions".
I am not an ATM user, so please tell me: is it common knowledge that an ATM transaction is not the same thing as a check card transaction?
However, I'm not sure that I would have guessed that a PayPal purchase would have shown up as an ATM transaction. I can see how arguments could go either way on that one, though. In general, I try to make purchases early in the month and check my balance frequently to make sure the transactions count. As Rick mentioned, I also try to do a couple extra debits per month as well, just in case. I also figure it keeps the bank happier and less likely to close my account. ;)
When paying with Paypal, go to Funding Options and specify the Visa/Mastercard network.
1) posting delays. It can be up to 2 days, but generally occurs 1 day after the POS takes place.
2) Signature-based transaction. Make sure you understand what transactions count (internet, PIN, or signature only).
3) Statement cycle for qualification. Some have really odd cycle dates (e.g., 3rd Wednesday of the month).
From one of my account disclosures:
"The 12 or more Non-PIN debit card transactions must POST (emphasis in original) to your account on or before the fourth Tuesday of the month. Processing time varies with each MERCHANT (emphasis added) so please allow several days for a transaction to post to your account. Be sure to use your debit card early and often each month to conduct Non-PIN card transactions."
Early, often, and with a simple strategy. (I use it for certain budget items.)
I agree with a couple earlier posters: This is are end of the bargain, and thus our responsibility to monitor, and meet in spirit, as well as letter.
No need to make sure there are a certain number of transactions or worry about fees on the account.
Off-topic: the new depositaccounts site is messy, confusing, and terrible! Many banks are listed wrongly (e.g., Goldwater Bank). OK, it is fixed now; but still no comparison to the old highhyieldcheckingdeal.com. It is sad.
Talk on issues, do not attck persons. Is that so hard??
Ive been trying to meet someone for years who I have adored and then everytime something came in thinking I have lost the chance to meet and me feeling sick and to date I keep looking for her to see if what happened is true since I miss her immeasurably.
Life just isn't about money. Its about having people around you who are best of breed in their respective fields and diciplines and having great people surrounded around you at all times who are there with you, not against you.
Too funny. How about racking up 15-20 charges for pennies or a few bucks each, just to game the system? Is that low enough? Hello!
"Talk on issues, do not attck persons. Is that so hard??"
We are talking about issues. This particular issue is that a few people are taking blatant advantage of a good thing, and that will ruin it for everyone. Gee, I wonder why are you defending this behavior ... .
How very, very true!
However, this blog site happens to be about money.
If you do not know the difference, mercy on you.
About small transactions, it is human nature. It is not correct, but people do that all the time due to greed. I would encourage all RCA users to do at least a few $5 - $10 transactions, and more transactions than required.
Even with a stronger requirements imposed by FAB&T (as an example), they had to reduce rate significantly (4.44% to 3.5%).
It is just a token cooperation/appreciation from us customers.
You will find those who do small transactions are heavy rate hoppers as well (both from the origin of greed - human nature; not criticizing). They all fall into the category of "win small, but lose big" in life.
Being "cheap" in life eventually loses in any endeavor, personal life, family life, and social life.
JMHO.
Good to know it's just your OPINION.
Why must the topic get off the subject matter and turn into lectures on social life?
And what have you got to contribute back to topic??
1. Do not fall in love with banks. They are solely for profit. Thus regard RCAs as offers, not charity.
2. Most RCA customers have reward credtit cards, thus debit transactions eat directly into reward. Hit a balance with debit card transactions (in amount as well as numbers). Many banks expect RCA to be used as primary banking account. thus charge on a variety of purchases (gas, coffee, restaurants, supermarkets, etc.).
3. Select only those that are "less known" and "more restricted (in membership)" for stable APY for a long period.
4. Do not do rate chasing. Banks eventually come down to norm/mean. Thus a solid 4% RCA is better than a 5% popular RCA.
5. I have 14 RCAs and I run it like a business with no error margin!
Good luck, folks.
Please give more detail on how you go about making over 150 debitcard transactions per month.
Let alone making them for a variety of purchases !
I have considered more accounts but frankly, Im not sure Im organized enough.
In fact, my first month with my 4th account, I ****ed up and forgot a deposit and lost rewards on $100k.
Sams is the only place that Ive made lots of transactions at once without getting shut down.
It is a bit more cumbersome as it requires entering your member card every time.
I am reluctant to forgo my regular rewards (5% on Gas, 2-5% on groceries and 1.25-1.50% on everything else).
Aldi is the only place that doesnt accept credit cards and I only go there 3-5 times per month.
I dont feel the need to "give back" to these banks. The average joe with a $600 balance does that for me.
If I was his bank I would have DENIED his claim & tell him to look for a different bank if he wants to. STOP PLAYING GAMES, BANK IS A BUSINESS TOO & NEED TO MAKE MONEY TOO.
a fan of rwrd. acct.
It is very easy for my 14 RCA accounts. I am usually done within a week after the monthly start date.
It is like clock work; mainly with utility companies and gas station.
ACH is met with Ally.
The most important point of RCAs is to "double-check" each account painstakingly toward the closing date of each month (usually a week before).
BTW< I have two $100K limit, 4% APY RCA accounts.
When requirements are met, I styill use debit cards continually with all knids of purchases and generous amount.
Record is the second most important point for RCAs. Use a nice notebook, tabulate all cards, and record the purchases as soon as they are made.
I am an engineer so it is not a problem for me to be mechanical and repetitive; especially for profit.
But there are circumstances where that may not happen -- e.g., mislaid debit card that can't be found for days or weeks, trip outside the U.S. where debit card use may not be cost-effective compared to using a credit card, etc.). In those circumstances, the question is whether or not the bank can arbitrarily date debits so that they fall outside the qualification cycle, or whether the Bank is bound by any rules or regulations which protect the customer from that happening.
If you make a PIN-based debit it is an immediate withdrawal of funds. If you had $50 in your account and use the debit card at a retailer to spend $50 you can't then make another $50 purchase because the money isn't in your account. If the Bank knows the money isn't in your account as a result of the first purchase, it shouldn't be able to post the transaction on some other date than the one on which it occurred (if it's a PIN-based debit).
And as far as scratching the banks' backs goes, let's not forget that they have the use of your $25K or $50K to do what they want with, so it's not like they're getting nothing except via the debit card transactions.
OK, of course I know the multi-card drill at the gas station. So far, I identified only one Mobil Station that is totally hands-off. I can do 20 transactions without any interference. I thought ath you said 20 with one card, that must be magic.
In this cold weather, I refuse to go through the gas station torture. Just stay home and play with online charges.
People are green with envy to attack you, carry on with the good work!
No thanks.
We all meet the RCA requirements in our own way, and have the accounts for our own needs (14 of them?!!).
This has been an enlightening and entertaining discussion.
I have my own money, banks' 0% credit card money, and low-rate HELOC money.
14 accounts are a bit too much, but there is a balance point (say 4% APY) that I would stop doing that and close RCAs. So, hopefully I would not do that for the rest of my life.:-)
Now comparing this RCA chore to Tiger's adventure is both off-topic and irrelevant; but FUNNY. First, I do not enjoy doing 14 RCAs as much as Tiger enjoy doing 14 blonde. Second, it is legit to do 14 RCAs (I definitely do more than the $1 debit transactions). Third, I would never fall in love with any of the RCAs. Fourth, some may be green with envy with Tiger's money and women but we all know that Tiger is not happy at all.
Well, the Tiger-claimed addiction one (which I do not believe) is a bit similar to the RCA part...haha
Peace!
Enjoy it while it lasts. For all of you who are abusing it, shame on you, low life creatures.
Banks offer RCA with T&Cs, customers earn interest via staying within bank T&C. What is so "abusing" about it??
Several banks set minimum debit card transaction to $5 - %10; then one has to abide by it to earn interest. Otherwise, anything is legit.
Banks, on the other hand, put vague rules like using RCAs like primary checking accounts. It is for them to request and for customers to follow according to their interpretation.
It is more like a legalized game. As long as one gets by with the claimed high interest monthly, it is even.
As for "low life" name calling, where does the anger come from? Are you a victim from RCA "abusing" or you are just anrgy that you did not earn such interest?? My sympathy to you:-)
No justification needed, the 5% interest for several ten-thousands speaks for itself.
You are not rich person, money does not make people rich.
Only low-life persons think that way.
Richness is found in the good character, good deeds, caring and giving and being responsible.
You are missing the whole point in life. Character like you can have all the money in the world and still will feel miserable if not involved in some sort of mischief.
Gloating and praising yourself proves my point of view.
You really do not know me at all. And you keep on your "low life accusation." That is not healthy for your mental life, dude.
How do you know whether I am rich or not? I was just making a general remark.
Accusing others without any fact proves my point that you are just wishing for those good characters of a so-called "rich person."
Are you being responsible to accuse an unknown person on the internet based on a paragraph or two?
Do you have good character/deed to do that based on extremely limited information? Who knows, we may have mutual respect for each other if we get to truly know each other? Why are you being so presumptuous?
Reading through your own post and the tone of your post, do you feel that you are kind to people?
I was making general remarks on earning 5% is good enough, abusing or not is not an issue at all.
And you are launching personal attack, accusing me being rich (thanks, I am not that rich at all) and living a miserable life.
Hey, it is Christmas. Truce to you and wish you/your family a Merry Christmas and Happy New Year!
Back to Topic:
Another point of challenge for RCAs is when to change to a bank of higher rate.
My criterion is that it will take at least 1% difference for even considering a change of bank.
Somewhat related is whether to keep all the RCAs or to close some of them (once becoming unattractive). My criterion is to close those that have really low APYs (e.g., 3%), but keeping others; in the hope that they will return to high rate in the future. Note that most banks charge fees for early closure (90-180 days). Most banks also charge dormant fees after 3-6 months of inactivity.
Yes, traps after traps to watch out for.
Hope this helps.
Let us help one another in this thread instead of meaningless debate on how one meets debit transaction requirements (and whether it is abusing or not). We are not the banks and we are not consumer advocates!
Well, there may be just 1, at most two; hint, hint.
I do not even know, and care, what the fight is about!
Can't we just get along?
It seems to be a losers' game to rate chase. Banks usually offer high rate to attract new money/customers. Once the quota is met (money-wise and fund-wise), they drop rate, coupled with limits locality.
It may be wise just to stay with some local restricted banks with stable rate.
I keep all RCAs due to laziness.
Good points though for important gotcha.
Thanks for your contribution.
Charging $1 or so on RCA debit transaction may be a loophole of banks. They detected that long ago. Many banks do not care. For those who care (FAB&T, etc.), they further clarified in their T&C (or FAQ) that they define debit transactions as at least $5 - $10 per transaction. For those who do not care, there is no abusing if one does such small transactions (pending further warning). All customers are playing by the banks' rule so there is no such term as abusing. The dollar coin buy/sell is another matter, typical as abusing can be used.
We are not clear why certain ones are so sensitive to put a big hat on people in general without any facts and proof.
Just show us how any internet forum can be filled with strange personality; that we try hard to stay away from.
We, for one, do at least $4- $5 transactions. Look at it this way, for 12 $5 transactions, it is $60 per month and a loss of $1.2 in credit card reward loss (for a 2% card). Thus recommend charge to things that is usually in the 2% category (e.g., utility) and give back the $1.2 a month.
Case solved and no arguments incurred!
Last point, banks change rate all the time; really very little to do with small debit transactions. To repeat, if they think that it is a problem, they simply need to impose new rules on debit transactions, like some banks did.
Positively, this forum has become more lively with these "interesting" personalities.
Finance, Health Care, Tiger Wood, ****-****tual, Corporate Conspiracy, Politics, and of cource, reward Checking.
BTW, most people who criticize RCAs never tried RCA at all; then they feel all green when people did them easily.
Come on guys, it is not rocket science.
I am against minimal $1 dollar purchases, especially at small mom/pop type businesses, but I often make small donations to charity. A couple of my local charities don't mind at all getting my small donations. Even after fees, they are ahead.
You can even donate a dollar to banking guys paypal donation link. After fees he probably still clears .70 cents. Better then nothing, and your not hurting a small business owner.
We do at least $4 - $5 payment as well.
Only Utility companies like Verizon.
IT ROCKS!
Those who **** and moan about abusers just do not have the nerve to test it out.
They are missing a lot, with a mere 1% - 1.5% APY saving rate.
They may win in the high-horse ethical debate (and money isn't everthing poorman logic), but lose big time in the real life financial marathon!!
To those that claim they have these $100000 @ 4% accounts, pray tell us where they are?