My CU has offered a special interest (dividend) earning checking account for the past few years. Previously, it earned 2% APY, now it just went up to 3%. But, of course, there's conditions, which is why I haven't jumped as of yet. But at 3%, it's getting tempting.
It earns up to 3% APY on balances up to $10,000. But, in order to earn this rate, I would have to:
1. Direct deposit at least $1k/month. No problem there.
2. Log into online banking at least once per month. No problem there.
3. Make at least $500 per month in point-of-sale or online purchases using my debit card.
It's no. 3 that gives me hesitation. Security concerns mainly. Keeping $10K in a checking account (to maximize earnings) and then having to use the debit card in a bunch of places to earn the higher APY, sounds like a great way to get cleaned out if the debit card info gets hacked/stolen/compromised.
I use credit cards almost exclusively for all non-cash purchases, since if those get compromised, I'm only out that card/credit line and not my checking account I pay all my bills out of. Also, I earn cash back on my cards, which I'd lose some if I had to shift a bunch of spend to the debit card. I'd have to weigh if $300/year (probably closer to $200 after taxes) is worth losing a chunk of CC rewards and security over.
Also, my spend isn't always super consistent and there is no one thing (even groceries) that consistently exceeds $500/month. If I had one thing I spent that much on every month, it would be easy. And if I miss the target, the account only earns 0.05% that month.
If online bill pay counted toward the $500 debit card spend, it would be a no brainer. But no, it has to be purchases/swipes on the debit card. I don't even know if a recurring subscription/payment would count.
I miss the old days when you could just put money in a savings account and earn interest on it without having to jump through hoops.
@CreditMarathoner wrote:My CU has offered a special interest (dividend) earning checking account for the past few years. Previously, it earned 2% APY, now it just went up to 3%. But, of course, there's conditions, which is why I haven't jumped as of yet. But at 3%, it's getting tempting.
It earns up to 3% APY on balances up to $10,000. But, in order to earn this rate, I would have to:
1. Direct deposit at least $1k/month. No problem there.
2. Log into online banking at least once per month. No problem there.
3. Make at least $500 per month in point-of-sale or online purchases using my debit card.
It's no. 3 that gives me hesitation. Security concerns mainly. Keeping $10K in a checking account (to maximize earnings) and then having to use the debit card in a bunch of places to earn the higher APY, sounds like a great way to get cleaned out if the debit card info gets hacked/stolen/compromised.
I use credit cards almost exclusively for all non-cash purchases, since if those get compromised, I'm only out that card/credit line and not my checking account I pay all my bills out of. Also, I earn cash back on my cards, which I'd lose some if I had to shift a bunch of spend to the debit card. I'd have to weigh if $300/year (probably closer to $200 after taxes) is worth losing a chunk of CC rewards and security over.
Also, my spend isn't always super consistent and there is no one thing (even groceries) that consistently exceeds $500/month. If I had one thing I spent that much on every month, it would be easy. And if I miss the target, the account only earns 0.05% that month.
If online bill pay counted toward the $500 debit card spend, it would be a no brainer. But no, it has to be purchases/swipes on the debit card. I don't even know if a recurring subscription/payment would count.
I miss the old days when you could just put money in a savings account and earn interest on it without having to jump through hoops.
I agree with you 100%. Which is why I consider that type of account worthless.
Using a debit card for purchases is really dangerous, unless the accounts to which the card is linked have an insignificant balance, in which case the 3% interest is meaningless.
You could get 3.5% interest in a completely safe savings account at Affinity FCU (up to $5k).
I agree with you wholeheartedly.
I don't even carry debit cards with me these days and do not pay anything from my checking account other than credit card bills if I can help it.
(+102) | 
(+106) | 
(+151)
@creditfan wrote:alternative https://orionfcu.com/checking/#Premium_Checking_Alert
debit transactions is optional
below is my primary banking, meeting their requirements is a piece of cake
https://www.bcu.org/Banking/Checking/Powerplus-Checking
Yes both of those seem much better.
But both credit unions are geofenced. And the requirements for the BCU account wouldn't be a piece of cake for me.
@ThomasJNewton wrote:
@SouthJamaica wrote:Using a debit card for purchases is really dangerous, unless the accounts to which the card is linked have an insignificant balance, in which case the 3% interest is meaningless.
There are debit card transactions that are pretty secure and not likely to be a problem, especially if the counter party has deep pockets and can be sued if there is a problem.
I disagree
@ThomasJNewton wrote:
@SouthJamaica wrote:Using a debit card for purchases is really dangerous, unless the accounts to which the card is linked have an insignificant balance, in which case the 3% interest is meaningless.
There are debit card transactions that are pretty secure and not likely to be a problem, especially if the counter party has deep pockets and can be sued if there is a problem.
For example: Filling one’s Apple Cash Card with $500 a month and then spending from there. Paying part of one’s rent. In other words, things where your card does not leave your hands.
Using a debit card online isn't safe either. It's even less safe than physical card transactions since you have to provide the actual numbers, not an encrypted chip read. Sites get hacked all the time. The same is true for credit cards, but the latter offers zero liability protection and it doesn't put my money at risk, only the bank's. Even then, I keep low limits on the CCs I use online to minimize the damage a thief can get away with. A debit card tied to an account with $10K kept in it is like carrying $10K cash in your pocket and walking through the seedy part of town.
Having to apply for membership at multiple CUs just to get a decent return on savings is a hassle too. I hope with rising rates my CU starts offering better options for savings.