Financial

Money at 30: American Express Rewards Checking Review

When you think about American Express, there’s a good chance that premium credit cards come to mind. That’s definitely understandable as the company not only boasts a $695 annual fee Platinum Card but is also home to the legendarily clandestine Centurion card — AKA “The Black Card.” Despite this reputation, Amex has been branching out in recent years. Now, its latest shot at growing its customer base comes in the form of the American Express Rewards Checking account. What’s more, this offering allows customers to earn Membership Rewards points with a debit card.

So what else does the American Express Rewards Checking account have to offer? Let’s take a look at some of the details along with my personal experience with the account so far.

What is American Express Rewards Checking and How Does it Work?

Signing up

First, at this time (as of February 2022), only those customers who already have a consumer credit card with American Express are eligible to open a Rewards Checking account. For these customers, they can apply for an account by going to the Rewards Checking page, logging into their account, and verifying their information. Once approved, customers will need to make a deposit within 60 calendar days from when the account was opened — otherwise, it will be automatically closed. That said, there is no minimum deposit requirement (as long as it’s above $0, I suppose). To make a deposit, account holders can link an external bank account to initiate a transfer or use the mobile check deposit feature in the app.

Debit card

After opening an account, Amex will mail a Rewards Checking debit card to customers. This card features a vertical orientation and a silver/grey design that incorporates Amex’s classic “World Service” logo. The card also supports tap-to-pay functionality but is equipped with a chip and mag strip as well.

APY

Despite being a checking account, funds in your Amex Rewards Checking will earn interest. Currently, the account earns 0.5% APY — which is 10x the national average. What’s more, it matches what Amex itself offers with its existing high yield savings account. While there are some FinTech accounts that have even higher rates than that, it is pretty solid for the times.

Mobile check deposit

Like many other banking apps, Rewards Checking also supports mobile check deposits. In the Amex app, customers can simply select “Deposit Check,” enter the amount and take photos of their checks before submitting. Considering that many FinTech banking apps are starting to let this functionally fall by the wayside, it’s nice to see that Amex is offering it from the start.

ATM access

Amex Rewards Checking customers have access to more than 37,000 fee-free ATMs that are part of the MoneyPass network. To find an eligible ATM, customers can use the Amex app, navigate to their Checking account, tap the circle with three-dot in the upper right, and select “ATM Locator.” Note that, in addition to MoneyPass ATMs, the app will display other nearby ATMs by default. However, using the Filters, users can choose to only display MoneyPass ATMs to ensure they are not charged a fee for withdrawing cash.

Earning Membership Rewards Points

One of the selling points of American Express Rewards Checking is that it offers a debit card that earns Membership Rewards points. Specifically, customers can earn 1 point of every $2 spent on the card. Notably, that’s half of the 1x point base than many Amex credit cards have.

Redeeming Membership Rewards Points

For those Checking customers who also have Membership Reward-earning cards, the points earned from the debit card will be added to the same pool. This means that these points can be redeemed for Amex Travel, transferred to partners, used for statement credits, etc. However, these options won’t be available to those who only have the debit card. Instead, they’ll only be able to redeem their points for deposits into their account — with other cardholders also eligible for this option.

Currently, customers can cash out their points to the Amex Rewards Checking at a rate of 0.8¢ per point. This means that 10,000 points is equal to $80. For the record, it looks as though all MR points are eligible to be exchanged at this rate regardless of how they were earned. In other words, you’ll be able to cash out points you’ve earned from, say, your Amex Gold card and not just those yielded from your debit card. There also isn’t a minimum amount of points you’ll need to redeem at once as I was able to cash out a single point while running trials (it even rounded up to 1¢, so pro tip?).

Purchase Protection

Lastly, another benefit of the Amex debit card is Purchase Protection. According to the FAQ, eligible cardholders are protected against accidental damage or theft for up to 90 days from the time they make a purchase with their card. This coverage is limited up to $1,000 per occurrence and up to $50,000 per account per calendar year. Naturally, there are exceptions and other intricacies to this, so I’d recommend reviewing the terms PDF for more info.

My Experience with American Express Rewards Checking So Far

Card design

Before we get into the technical stuff, I need to give a shout-out to the card design. Personally, I think they really nailed it here, offering something that looks classy and perfectly Amex without feeling too old-fashioned. Overall, I really think it looks great.

Managing my account

When I first joined Amex Rewards Checking, I wasn’t quite sure what to expect in terms of the user interface. Specifically, I wondered if I’d need to go to a separate site or even app to manage my account. Luckily, this is not the case as, immediately after opening my account, I could access it by tapping the card icon on the site and selecting Checking. This streamlined experience has been great — but it gets even better.

As I went to connect my bank account in order to transfer funds, I noticed that several of my banking accounts were already there. Well, that’s because I’d previously linked them as a means of paying of my credit card balances. I don’t know why this surprised me but it was definitely a welcome feature that made it easy to get started with my new account.

“Debit card” deliberation

Here’s the thing about the American Express debit card: it could be a while before it’s actually recognized as the debit card it truly is. Let me explain. In most scenarios these days, for those using debit cards or credit cards, the payment process is all but indistinguishable. While using a debit card may mean entering a PIN in some cases, it’s increasingly common for debit cards to simply be swiped as credit and process just fine. However, there are some examples where the difference between debit and credit card is far more prominent. In fact, some retailers or other entities will only accept debit cards and not credit — or will charge much higher fees for using the latter. That’s where the Amex debit card currently runs into a bit of trouble since it’s a debit card that runs on what’s previously only been a credit card processing network.

So why is this a big deal? Well, it means that some of the use cases envisioned by points and miles enthusiasts upon the Rewards Checking account’s announcement have yet to come to fruition. For example, in my case, I wondered if I could pay rent with my new debit card in order to earn points, while only paying the $6.95 debit card fee instead of the $36+ credit card fee. Alas, as I suspected, the portal my apartment complex uses to process payments only recognizes the card as credit and assesses the higher fee. Meanwhile, however, Amazon apparently knows what’s up. When I added the debit card to my Amazon wallet, it did correctly note that it was indeed debit.

Ultimately, it will likely take time for Amex’s debit card network to be recognized as such. As the company writes in their FAQ, “We will continue to work with all merchants to successfully recognize our new Amex Debit Card when you select ‘debit.'” In the meantime, expect things to be very hit or miss.

Faster reward arrival

When you make purchases with an Amex credit card, you won’t actually see the accompanying points added to your balance for some time. This is because they’re typically not applied until after your statement has closed and you’ve paid your balances. However, since this isn’t really a thing with checking accounts, the points earned from your debit card purchases post much quicker. In my experience, my MRs displayed a day or two after the purchase posted.

While this is kind of cool, I also can’t imagine many scenarios where this would be needed. Nevertheless, I think it’s worth noting.

A better (but not great) cashout option

In my opinion, one of the biggest downsides to American Express Membership Rewards points is their poor cashback rate. While other currencies such as Chase Ultimate Rewards points set a floor at 1¢ per point for statement credits, typically, MRs are worth just 0.6¢ per point if you’re using them to cover the purchase. Because of this, the 0.8¢ offered by the Reward Checking deposit option helps close the gap a bit. What’s more, since Amex doesn’t differentiate between points earned on your debit card and point earned elsewhere, customers now have a quick and easy way to turn their points into cash if they need to. Of course, those who want to further raise their cashback rate might consider the Charles Schwab American Express Platinum card that allows customers to use MRs for deposits to their brokerage accounts at a rate of 1.1¢ each. Still, in terms of value, Amex credit card customers will likely want to transfer points to travel partners more often than not.

Final Thoughts on American Express Rewards Checking

Overall, there are several things to like about the American Express Rewards Checking account as someone who’s already an Amex customer. At the top of that list is the fact that those seeking cashback now have another option for redeeming their points at a better rate. Additionally, with the accounts’ decent APY, stylish debit card, potential (long term) point-earning abilities, and lack of fees, there’s really no reason not to open an account.

That said, the story is a bit different for those who will eventually sign up with Rewards Checking as their only Amex account. In their case, while the interest rate, ATM access, Purchase Protection, and other features may be attractive, the fact that the card only earns 1 point per every $2 spent and then only values those points at 0.8¢ each could easily be disappointing. To that point, I do think it is slightly misleading that Amex doesn’t make this exchange rate clearer from the jump, as I’d imagine most customers would expect a simple 1¢ per point value.

The bottom line is that, while I personally appreciate the American Express Rewards Checking account as it is now, the true potential of the account could take some time to emerge. This is true for both current cardholders and non-cardholders alike. Ultimately, though, I think the pros outweigh the cons and I look forward to seeing how this offering evolves in the future.

Also published on Medium.

Other Articles by Kyle Burbank