Reward checking accounts pay high interest rates on checking balances.
You earn money - sometimes more than a CD - and you still have access to it. However, you have to jump through hoops to qualify for the highest rates. Bankdeals recently highlighted some of the most common ways you can end up missing out on some of that interest, and what to watch for when opening an account.
In general, you have to bank online, use your debit card frequently, and set up direct deposit or an automatic transfer into the account. These requirements help the bank earn revenue, and ideally they pass it on to you with higher deposit rates.
Commenters at Bankdeals discuss these requirements in more detail. You'll find that some customers work the system, earning high interest rates without providing revenue to the banks. Of course, that'll never work over the long term.
If you're looking for a reward checking account, look for one that has a sustainable model and is more difficult to abuse. You'll enjoy the experience more, and you won't see rates drop once the bank gathers needed deposits (or gives up on an unprofitable product).
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