Checking and savings accounts that give you 5% back do not exist, right? I mean, I’m a woman married to her high school sweetheart, who also happens to be a banker. I should know everything about banking and about checking and savings accounts that give you 5% back, and that is not something my husband’s bank offers. When we met 14 years ago and began dating, he worked for the same bank part time and attended college. By the time he was done for school he was a full-time employee and he had worked his way up several positions. A decade and a half later, he’s still there working hard every single day, albeit in a much better position than he was when he began his job there so many years ago.
Admittedly, I don’t go to the bank unless it’s to have lunch with him. Therefore, I know next to nothing about banking. I know that I haven’t been to a bank to make a deposit, get a cashier’s check for a large purchase, withdraw money or even through a bank drive-thru in about 14 years. That means I know very little about banking. What I know, though, is that our accounts are not checking and savings accounts that give you 5% back.
What I just learned, though, is that many bank accounts do just that.
Seriously; there are banks out there that offer their customer some serious cash back for their deposits, and it’s not a joke. In a world when meaningful returns on any average balance are laughable, this is one of those situations in which we just have to stand back and marvel. There are banks that offer checking and savings accounts that give you 5% back. Just take a moment to let that sink in.
Now take another moment to let it sink in that the average bank account offers returns on your investments that are an average of .11% and .16% (Checking and Savings, respectively). Someone stop it; this cannot be true. Friends, this is true. I’m currently texting my husband asking him if we can switch banks or if that is some sort of conflict of interest (interest…get it?) for him and his position, because I want to open a few new accounts. Now that you’re also mentally closing your bank accounts, it’s time to find out where we need to go, what we need to do and how we can open up some checking and savings accounts that give you 5% back on your deposits.
First, though, let’s talk about what this means. Let’s say you have a savings account with a big bank that offers .01% on your deposits (that’s a real bank, but I won’t name it). You’d earn a whopping $1 after a year if you have $10,000 in that account. One dollar on ten grand; that’s ridiculous. Now what happens if you’re making 5% back on that? That’s $500 you’re getting back each year just for putting your money in one of the checking and savings accounts that give you 5% back. Ready to switch financial institutions now?
Savings Accounts Linked to Prepaid Cards
These are bank accounts that you might not be aware of, so we’re going to tell you all about them. This kind of account is one in which you can open up an account that is linked to a prepaid card, such as the NetSpend Visa card. What this card does is allow you to take advantage of a savings account at MetaBank that offers 5% APY on your account on any balance you have in the account up to $5,000. If you have more than that in this account, the APY drops significantly to less than 1%; .5% to be precise. The only issue with this account is that you have to apply for the card, load it and then you have to open the savings account, transfer your money into it and do all that work. It’s a lot in terms of opening a savings account, so it’s not for everyone. However, it does pay you a lot of money every year, so it is worth it if you can take the time to set it up.
Another option is the Mango Card. This is one that pays more than 5%, so it’s worth looking into. You will pay a $3 monthly fee, but you also earn 6% APY with the linked checking account. The only catch is that you have to have at least $500 per month in direct deposits going into this account, but it’s a lot of money to earn after a year. Think about it; that’s $300 for a $5,000 balance. Doesn’t that sound a lot better than fifty cents?
I know what you’re thinking; if all you have is $5,000 or less, these accounts seem great. But what about those of you with more than $5,000 you’d like to save? The simple solution is to open several of these accounts and let the benefits just roll in left and right. Sure, it’s a lot more work than you probably want to bother with, but think of it this way; you can open a savings account and put $50,000 into it at your current bank and earn .16% interest on that for a grand total of $800 after a year, or you can open 10 of these prepaid card accounts with a return of 6% each year.
With a monthly fee of $3 per account, you’re looking at paying in $30 per month for a grand total of $360 in fees this year. However, you are earning $300 a year on 10 accounts. that’s $3,000 in interest this year alone. Subtract your $360 in fees and you’re still earning $2,640 in interest. That’s a lot more than $800, correct?
Rewards Checking Accounts
If you’re looking at checking and savings accounts that give you 5% back, these are the accounts to check out. It’s not the most commonly used type of account since it is one that requires a bit more work than a traditional bank account. However, it does pay off. Let’s look at the Northpointe Bank account called the Ultimate Checking Account that pays 5% APY. You have to open this account, sign up for your statements to come to you via email and have a direct deposit of at least $100 per month, every month. Additionally, you have to use your debit card a grand total of 15 times or more every month and make more than $500 worth of purchases simultaneously. It’s a lot of work keeping track of your debit card usage and spending like this, but the rewards are welcome.
You should know, though, that you’re only eligible to earn 5% APY on your first $5,000 worth of deposits. It might not sound like much, but that’s $250 per year that you were not earning before.
Here’s another one that might be a bit more conducive to those with higher savings balances. The Consumer Credit Union’s Free Rewards Checking account is, you got it, free, and it offers you a return of 5.09% APY. The good news is that you will earn that on balances up to $20,000. Unfortunately, you have to meet some pretty strict requirements for this account, and it’s going to take some creative accounting and organization to make it work for you.
For instance, you have to make 12 pin-less debit card purchases each month (i.e. using the card associated with the account to purchase gas using the credit option), you have to either have one direct deposit going into the account each month or one bill being paid from the account, you have to login to your account online one time per month minimum, have your documents emailed to you monthly and you have to spend at least $1,000 per month using the CCU Visa credit card. That’s a lot, but it doesn’t seem like it when you add up all the savings that go along with this.
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