American Express Debuts Rewards Checking Account
American Express is expanding its offerings, launching its first all-digital consumer checking account. Dubbed Amex Rewards Checking, the new account is now accepting applicants.
Despite being a checking account, American Express will offer customers 0.5% APY on funds held in their account. As for other features, accountholders will have access to more than 37,000 fee-free ATMs that are part of the MoneyPass network and will enjoy Purchase Protection on eligible purchases, covering accidental damage or theft. The account also forgoes monthly maintenance fees and minimum balance fees.
Perhaps the more interesting aspect of the Amex Rewards Checking account is that it earns Membership Rewards points as well. The debit card will earn 1 Membership Reward point for every $2 spent. Customers who only have Rewards Checking will be able to redeem their points for deposits into their account, while those with linked Amex credit cards that earn MR points will be able to pool their points and use them as they see fit (including deposits to their Rewards Checking). According to Amex’s rewards calculator, these checking deposits will be made at a rate of 0.8¢ per point, meaning that 10,000 points will be worth $80.
Explaining why Amex decided to launch the new account option, the company’s EVP and GM of Consumer Banking Eva Reda said, “Our Members want more banking products and services from us. And they want more from their checking account, without giving up the benefits that are important to them. That’s why we built Amex Rewards Checking to deliver more value for Members with the powerful and trusted backing of American Express.”
To Reda’s point, a survey conducted by Amex found that consumers preferred debit cards to credit cards for certain purchases. Furthermore, 81% of Gen Z and Millennials surveyed said they prefer to use their debit cards as an alternative to cash. Thus, with the Amex Rewards Checking debit card, they can still earn MR points while making debit purchases.
Overall, the American Express Rewards Checking account has some interesting things going for it. First, while 0.5% may not seem like much, it’s not only 10x the national average for savings accounts but it’s also rare to find a checking account that earns interest at all.
Secondly, the account seemingly presents some new possibilities for Amex card customers. For example, if an American Express Gold Card customer wants to redeem their Membership Rewards points for a statement credit, they currently only earn 0.6¢ per point whereas the option to convert their points to checking deposits would yield them 0.8¢ per point (turning 10,000 points into $80 instead of $60). That said, it’s not yet 100% clear if only MR points earned from Reward Checking will be eligible for this redemption option or not [Update: it looks as though users can redeem any of their MR points for checking deposits regardless of how they earned them]. In any case, Amex’s expansion into debit cards demonstrates a continued shift in the way Americans spend — making the account an intriguing experiment worth keeping an eye on.
Also published on Medium.