Yes, you can open a rewards checking account, but the terms vary widely by bank
A rewards checking account is a standard checking account that pays you interest or cash back when you meet certain conditions — usually a minimum number of debit card transactions per month, a minimum balance, or direct deposits. The catch is that these accounts are not offered by every bank, the interest rates change frequently, and the conditions to earn the reward can be strict.
Most rewards checking accounts are offered by smaller banks and credit unions rather than the largest national banks. You will need to meet the bank's standard requirements to open any checking account — proof of identity, Social Security number, and an initial deposit — plus the specific conditions that unlock the reward.
The reward itself is usually modest. Interest rates on rewards checking accounts range from less than 1% to around 5% annual percentage yield (APY), depending on the account and the current interest rate environment. Some accounts offer cash back instead — typically 1% to 2% on debit card purchases — but only if you hit the transaction threshold that month.
Key Takeaways
- Rewards checking accounts require you to meet conditions each month — such as 10 to 15 debit card transactions or a minimum balance — to earn the advertised interest rate or cash back.
- If you do not meet the conditions, the account often reverts to a standard checking account with little or no interest, so read the fine print before you open.
- Smaller banks and credit unions offer most rewards checking accounts; the largest national banks typically do not.
- Interest rates and cash-back percentages change frequently, so the rate advertised when you open may not be the rate you earn six months later.
What conditions you need to meet each month
The most common condition is a minimum number of debit card transactions. Banks typically require 10 to 15 transactions per month, though some ask for as few as 5 or as many as 25. Each transaction must be a debit card purchase — ATM withdrawals and transfers do not count. If you do not hit the number, you lose the reward that month.
Some accounts require a minimum balance instead, usually between $500 and $2,500. A few accounts ask for both: a certain number of transactions and a balance held throughout the month. A smaller number of accounts reward you for direct deposits — typically $500 or more deposited directly from your employer or government program.
Read the account disclosure before you open. The conditions are the difference between earning 4% APY and earning 0.01%. If you rarely use your debit card or cannot maintain a balance, a rewards account will not work for you.
How to find and compare rewards checking accounts
Start by checking your current bank or credit union. If they do not offer a rewards checking account, search online for "rewards checking accounts" plus your state name. Websites that compare bank accounts — such as Bankrate, NerdWallet, or DepositAccounts — let you filter by interest rate, minimum balance, and transaction requirements.
When you compare, look at three things: the APY if you meet the conditions, the APY if you do not, and what happens if you fall short one month. Some banks drop you to 0.01% APY. Others move you to a basic checking account with no interest. A few let you carry over one missed month without penalty.
Call or visit the bank's website to confirm the current terms. Interest rates and conditions change, and the rate you see online may have changed since the comparison site last updated. Ask whether the rate is may provide for a set period or whether the bank can lower it at any time.
What you need to open the account
You will need the same documents to open a rewards checking account as any other checking account: a government-issued photo ID, your Social Security number, and proof of your current address (usually a recent utility bill or lease). Some banks ask for a second form of ID.
You will also need to make an initial deposit. Most banks require between $25 and $100 to open, though some have no minimum. A few rewards accounts require a larger opening deposit — $500 or more — so ask before you start the process.
You can open most accounts online in 10 to 15 minutes. The bank will verify your identity and run a check on ChexSystems (a banking history database) to make sure you do not have a history of overdrafts or fraud at other banks. If you pass, your account opens immediately and you can start using it within a day or two.
What happens if you do not meet the conditions
If you miss the transaction requirement or fall below the minimum balance, you lose the reward for that month. The account does not close — you can still use it to deposit and withdraw money. But your interest rate drops to the non-reward rate, which is often 0.01% APY or lower.
Some banks let you make up a missed month. Others reset the counter each month with no carryover. A few penalize you by moving you to a different account type entirely. Read the terms carefully, because the difference between "you miss one month and earn nothing" and "you miss one month and get moved to a savings account" matters.
If you consistently cannot meet the conditions, close the account and move to a standard checking account. Rewards accounts are designed for people who use their debit card regularly or who can maintain a balance. If that is not you, the account will cost you nothing, but it will also earn you nothing.
How interest rates and rewards change over time
Banks change the APY on rewards checking accounts frequently — sometimes monthly. When interest rates rise or fall in the broader economy, banks adjust their rates to stay competitive. An account that paid 4% APY last year might pay 2% APY this year, or vice versa.
The bank will notify you of rate changes, usually by email or through your online banking portal. You are not locked into a rate, so if a better account becomes available elsewhere, you can open it and move your money. There is no penalty for closing a rewards checking account.
Cash-back rates also change, though usually less frequently than interest rates. A 2% cash-back account might drop to 1% if the bank needs to cut costs. Again, you will be notified before the change takes effect, and you can move your money if the new terms do not work for you.
Frequently Asked Questions
Do I have to use the debit card for the transactions to count?
Yes. The transactions must be debit card purchases at merchants. ATM withdrawals, transfers between accounts, bill payments, and online purchases using your card number do not count toward the transaction requirement. Some banks are stricter than others, so confirm what counts before you open.
What if I open an account but change my mind after a week?
You can close the account at any time with no penalty. Most banks do not charge a fee to close a checking account. If you made a deposit, you will get that money back. Close it online, by phone, or in person at a branch.
Can I have a rewards checking account and a regular checking account at the same bank?
Yes. Many people keep both — they use the rewards account to hit the transaction requirement and earn the interest, and they use a regular account for bills or savings. The bank will treat them as separate accounts, and you can transfer money between them.
What if the bank lowers the interest rate after I open?
The bank can lower the rate at any time unless you have a rate may provide in writing. You will be notified before the change. If the new rate is too low, you can close the account and move to a different bank — there is no early-closure fee on checking accounts.
Do rewards checking accounts have overdraft fees?
Yes, most do. Overdraft fees are the same whether you have a rewards account or a standard account — typically $25 to $35 per overdraft. Some banks offer overdraft protection, which links your checking account to a savings account or credit line to cover shortfalls. Ask about this when you open.