Should You Satisfy Reward Checking Requirements with Small Debit Card Purchases?

There are many ways you can make multiple small debit card purchases to meet the debit card usage requirements of reward checking accounts. Some of these are discussed in forums like this FW thread. These methods can allow you to meet the requirements from multiple reward checking accounts without spending a lot of money and time. Also, this will allow you to use cash-back credit cards on large purchases. This might sound appealing, but there are two important downsides to consider:

1. Many banks want their reward checking customers to treat the account as their primary checking account. Some have even explicitly stated in their terms that debit card purchases should "not simply be 12 de minimis transactions designed to qualify for rewards requirements." If your average monthly purchases don't meet some threshold, the bank may threaten to close your account. This is what happened last year with a reader who had an account at City National Bank.
2. If too many people limit their debit card purchases, banks won't be able to offer the high yields. As I described in my post on the math behind reward checking, debit card purchases help pay for the high yields. It takes a certain amount of debit card purchases to be able to offset the high yields that are paid. If one only makes $10 of debit card purchases, the bank may get back less than $1. If the customer has a $25K balance with 3% interest, he will receive about $62 in monthly interest. That $1 doesn't help the bank to offset the interest. If too many customers do this, the bank will be forced to lower the rates, reduce the balance caps or end the program.

How much do you spend per month with your reward checking debit card? Has your bank threatened to close your account due to too many small purchases?

To find nationally available reward checking accounts and reward checking accounts in your local area, please refer to the reward checking section of DepositAccounts.com.