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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

Anonymous   |     |   Comment #1
I transfer $5 from my Ally checking to fulfill the monthly requirement of ACH deposit/debit. Then I spend about the amount of interest earned in the previous month ($80-100) with my 10 or 12 debit card purchases so that the balances stay just around the max of 25k. I figure that way I don't have to worry not to let the balances grow above the max (and get much less interest for that portion). I also feel confident that the banks see me as a regular checking account holder and not some cut throat rate chaser. Once in a while I also pay a small credit card bill through the reward checking account, basically a small charge to keep my credit cards alive and well, thus I even use billpay to a very limited extent and those billpays also count towards the ACH debit requirement.
Anonymous   |     |   Comment #3
Remember, these are usually smaller banks that are rooted in the community they serve, not the big anonymous high way robber corporations. So, if you care to be able to benefit from such accounts, do your part so that they don't get forced to make them more and more unattractive.
Anonymous   |     |   Comment #5
Please do remember that when the "good banks" that are willing to pay you interest on your checking account are gone because you played the game, all will be left are the large corporations whcih will give you fees for the air you breathe if they found w way to do it.

This does not apply only to banks. I use my money the way I use my right to vote...carefully.
Anonymous   |     |   Comment #6
Pay me interest on my savings. Simple - straightforward - honest.   no gimmicks.      There is a reason these banks are using this sales pitch on these rca's.    Why should I have to worry about the number of debit card purchases I make every month , set up a dd, and the other bs  and then someone is thinking I should be gratefull to the banks and not abuse them !!!!!!  If I forget just 1 debit card purchase - there goes my reward. 

Sure , I treat my local banker well. I see him weekly outside of the bank and have for near 40 years. He treats me right.     But business is business and a gimmick is a gimmick.  
William   |     |   Comment #7
Since keeping part of my money liquid is important and since I'm dealing with a small community bank that's given me 100% satisfaction and perfect service with no gotch-you glitches ever, I've played it staight with them too. I spend all of that cycle's interest and leave the principal of 30K untouched.  I like to shop for groceries daily, so managing 10 debits for my two accounts (30K each), reaching the 20 debit per cycle is easy and I don't do $1.00 charges.
Dan B
Dan B   |     |   Comment #10
I think the idea that customers should "protect" these banks by being concientious in their debit card behaviour completely misses the point & the reasoning as to why these banks offer RCAs in the first place. These banks obviously have a hard time attracting enough deposits within their community to fulfill their loan projections. Simply put, if they didn't need the money they wouldn't be offering these to begin with. People need to understand that this money we're depositing is being lent out at a much higher rate. Profits are being made regardless of how many times we use our debit card. This whole 12 charges a month & direct deposit or whatever is just BS. The real profit being made by banks on debit cards etc is the profit from not having to pay the monthly interest to people who fail to meet the requirements. It is just another gimmick.
Mike   |     |   Comment #11
I use the debit card where it is needed: the warehouse store and at Aldi's. That plus a few other debits gets me through the month.
Tuphat   |     |   Comment #12
If a bank wants to impose a minimum dollar amount for each qualifying debit card transaction, it is free to do so.  In the meantime, I have no reservations using my card for de minimis transactions, e.g., 8 cent copies at Staples, 89 cent burritos at Taco Bell, etc.
John C
John C   |     |   Comment #13
I have three RCA accounts that I use actively, each at or near its maximum balance amount. I used to pay cash for all my routine daily expenditures. Now I almost never pay cash, and use my RCA debit cards whenever I can. With just two RCAs, I could meet the monthly purchase obligations without doing anything different. But with three, I have to focus on my purchases a bit, and sometimes will divide larger shopping purchases into two transactions, like food in one and electronics or such in a separate purchase at the same store like Target. I rarely use my card for anything that is less than $8-10 per transaction, and often closer to $20. I could, but never have used my RCA cards to do things like buy $1 songs online or buy a tank of gas divided up into many small purchases. I'm not trying to protect the banks. But I am keeping with the spirit of the account, and trying not to spend more than I would otherwise normally spend while still meeting my RCA account obligations.
Jo/Gaelicwench   |     |   Comment #14
I pretty much have the same philosophy that John does. I only have one RCA that I use for daily expenditures: Food, pets, hobbies, the newspaper billed monthly, et. al. This I keep track on a spreadsheet with one column marked "Buffer" so that I can put money aside for the purpose of saving. The amount of each purchase varies; sometimes it'll be as low as a couple bucks. Other times it'll be as high as $25 - $50, depending on where I shop. This works for me.

I would be really disappointed to see this type of checking account end. Since I already have to make purchases for necessities, it isn't as if I have to spend my way into poverty to meet the requirements. It also motivates me to save because of the higher interest rate.

Time will tell, I suppose.
Anonymous   |     |   Comment #15
hyperion bank in phila,Pa (small 1 branch bank) sent one of those "threatening to close" reward account letters. is this a growing trend among banks? i'd be interested to hear from others with similar experiences...
51hh   |     |   Comment #16
I finally hit one (small) bank that behaves "demandingly" as described in this article.  I think more banks are follwing suit of Southern Bank, etc.

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