American Express introduced its first consumer checking account this month, a fully digital option that is accepting applications from existing U.S. consumer cardholders who have had their cards for at least three months.
American Express Rewards Checking comes with perks including a hefty 0.5% annual percentage yield and a debit card that can earn points in American Express’ Membership Rewards Program, according to a company news release.
There is no immediate plan to expand access to the checking account beyond eligible cardholders, and American Express will focus first on gathering customer and marketplace feedback. “Every time we launch a new product, we always think about our current members first, and that’s where we’ll start,” says Eva Reda, executive vice president and general manager for consumer banking at American Express.
What Are Some of American Express Rewards Checking’s Key Features?
American Express Rewards Checking earns interest at a 0.5% APY – a rate that is well above the national average for interest-bearing checking accounts and equal to the APY available from American Express’ high-yield savings account.
Users won’t have to pay any monthly fees or maintain a minimum balance in their accounts. Customers can withdraw money from MoneyPass ATMs without paying fees and use the American Express app to manage their accounts, including for mobile check deposit.
The checking account also comes with purchase protection and zero liability fraud protection on eligible debit card purchases. The account’s fraud protection and monitoring stand out given the increase in fraud since the onset of the coronavirus pandemic, says Blaine Thiederman, a certified financial planner and the founder of Progress Wealth Management in Colorado.
How Can You Earn and Redeem Rewards With American Express Rewards Checking?
Every $2 of eligible spending on the debit card earns one Membership Rewards point, and checking account users will usually see their credit and debit card rewards accrue in one account automatically. You’ll be able to redeem your points for gift cards, travel, cash deposits and more.
If you decide to redeem your points for a deposit, one point is worth 0.8 of a cent, according to the Membership Rewards Program’s terms and conditions.
Note that you won’t earn points for nondebit card transactions, and you also won’t earn points for certain uses of your debit card, such as ATM withdrawals or cash withdrawals at point-of-sale.
Comparing Checking Accounts
For Thiederman, the 0.5% APY and fraud protection and monitoring help make American Express Rewards Checking the most competitive option he’s found in the market. “You actually get points back for spending with your debit card as well, which I think is pretty unique,” he says.
Customers interested in earning rewards for debit card spending can also consider Discover Cashback Debit, which offers 1% cash back on up to $3,000 in debit card purchases per month. Banks also sometimes offer account-opening bonuses to new checking account customers.
Unlike American Express Rewards Checking, interest checking accounts can have monthly fees and minimum balance requirements. It’s a good idea to check the fine print before signing up for an account.
Should You Apply for American Express Rewards Checking?
If you are eligible to apply, the American Express Rewards Checking account offers plenty of benefits for customers who are comfortable with digital banking.
American Express is aiming to continue to appeal to millennials and Generation Z with the digital checking account, Reda says. “I will say, though, that I think we expect the appeal to go beyond those populations,” she says, especially as the pandemic has put digital engagement and digital solutions “very top of mind for consumers.”
Thiederman expects the account to work better for younger, more technologically literate individuals. “I’d say just about anybody who’s (technologically) literate, who’s comfortable with it, could benefit from getting points and a half-percent APY,” Thiederman says.
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