American Express has launched a new Rewards Checking account that comes with the ability to earn Membership Rewards via debit card spend. That might initially sound exciting, but in reality it feels like a product in search of a market.
The Rewards Checking account earns 0.50% APY, has no monthly fees or minimum account balance and its debit card provides Purchase Protection, so those are all features counting in its favor.
That’s about the extent of its worthwhileness though. Although the account comes with the ability to earn Membership Rewards, it’s not a great earning ratio. Purchases with a debit card on the Rewards Checking account earn 1 Membership Rewards point for every $2 spent. Considering there are a number of debit cards out there paying 1% (or more in some cases), that means you’re effectively buying Membership Rewards points at 2cpp for any spend that you’d otherwise be putting on a debit card. That’s not a particularly compelling offer.
It’s not clear exactly how that debit card will function either because retailers presumably aren’t set up for Amex debit cards seeing as Amex prepaid products aren’t processed as debit cards.
Perhaps the most bizarre aspect of this new product is the fact that you have to have been a personal Amex credit cardholder for at least three months in order to apply for the Rewards Checking account. That means this product isn’t available for otherwise unbanked people or people with other bank accounts but who don’t have a personal Amex credit or charge card. It similarly won’t be a way back into the Membership Rewards ecosystem for those previously shut down by American Express.
The thing is, if you have a personal Amex credit or charge card, you’re already able to earn Membership Rewards points at a better earning ratio than 1 Membership Rewards point per $2 spent unless you’ve only applied for co-branded cards, so why bother putting any spend on this debit card?
If you do only have Amex co-branded cards, the Membership Rewards you earn won’t be transferable to travel partners. Your only redemption option will be for deposits, with 1 Membership Rewards point being worth 0.8 cents.
If the Amex Rewards Checking debit card is accepted for tax payments, that could be a good way to earn Membership Rewards points and only have to pay a ~$2.50 debit card fee rather than 1.87%-1.98% fee on credit and charge cards. Other than that though, there seem to be very few use cases for this new product. Perhaps it’ll be possible to do other interesting debit card activity with this card, but that could put all your Amex credit and charge cards in jeopardy and so isn’t worth it in my opinion for only 1 point per $2.
Unless there are other developments on the horizon or I’m missing something, the Amex Rewards Checking account seems like a dud.
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Is there a daily max spending of $5k on this debit card? Thanks.
It’s a niche market, but the market does exist. I personally know several people who have a credit card, but refuse to use them unless absolutely necessary. They are all people who had seen their parents’ financial downfall when the economic bubble burst. I tried to explain to them that they could just use their credit card like a debit card by buying only what they can pay back in full every month, but they had made up their mind.
[…] For the record, I think this is a non starter and you should avoid it: American Express Launches Membership Rewards-Earning Debit Card, But It’s Weird. […]
It would get a little interesting if you could deposit money into the Rewards Checking account with a “debit” card via the WalMart cash machines… (If you can find one that works).
Very specific use cases. Paying taxes with a debit card has a flat fee of ~$2 vs ~2% paying with credit; my Verizon bill discount for having auto pay via debit card outweighs the device protection I’d receive if I paid via my Amex Platinum; and my rent doesn’t charge me for using a debit card vs the 5% I’d get charged if using a credit card.
This card has nothing on Charles Schwab Investor Checking:
-free account as well
-UNLIMITED worldwide ATM rebates
-its a VISA card
-no FX fee
Now I guess the only downside with the Schwab vs amex checking is that you don’t get .50% I think it’s just .03% or something
What debit cards currently offer rewards?
Point debit card, Discover, PayPal Business Debit Mastercard, Green Dot 2%, various crypto debit cards and probably others.
Thank you.
Enzo debit card earns 1.25% on all purchases.
Here’s the missing bit: it needs to be usable as a debit card. If that means *other* Amex prepaid cards become usable as debit cards, well, then call me. Until then…yawn.
What about Money Order MS
As of now, it can only be “ran as credit” so good luck finding a place that would take it. Even if you did … they will shut you down so hard, don’t bother.
Makes sense, Thanks!
Some car payment processors take debit with low fixed fee. Maybe property taxes too. Same things that people were using PPK maybe?
Hi Stephen, you should also mention that AMEX has a business checking account called Kabbage that is currently paying 1.1% APY and also comes with a $300 bonus. Curious to see if this account will come with a bonus at all.
I don’t think Kabbage offers cashback or rewards on spending though does it?
No cash back on spending, just the 1.1% APY savings rate.
For someone with an Amex Platinum and an Amex HYSA, it is very compelling to me. I’m further incented by the 0.5% interest. Other than that, you’re right, it’s not very exciting and I’m sure it’s very niche who would be enticed by this new product. I’m surprised that they are not offering a more compelling incentive to sign up.
Non-network ATM fees. Foreign transaction fees. In a way, this seems like a short step beyond the Serve Card. I doubt whether this will be of any meaningful utility for anyone who needs more than the absolute basics. The same applies to its Kabbage offering. Punt.
If this AmEx debit card does process universally as a debit card, I think that this also creates an interesting opportunity for some renters. A few rental management companies offer rental payment through a debit card for a flat fee, exactly like the tax payment example you gave in the article. If you live in a high rent area and you don’t have access to Paypal Key, this could be a decent way to rack up some points for an insignificant fee. It’s better than nothing.
Consier the Bilt Mastercard.
I’d thought about the rent scenario, but again – you’re effectively buying Membership Rewards at 2cpp versus paying with a debit card that earns 1% cashback. As Reno Joe mentioned too, the Bilt Mastercard could be a good option if you’re wanting the ability to transfer points.
Definitely seems like a dud in it’s current state. Things that would make me move my checkings to them would be: