Also, I do keep more than the 3k in my account. This checking account is where I have actually decided to keep my emergency fund. I have enough discipline that I never even come close to touching that emergency fund even though it is in my checking account and available. But the interest earned on that emergency fund is better then I can find anywhere else so I am capitalizing on the opportunity.

I have really never had a problem with using my card 15 times in one month. We frequent Wal-Mart to get groceries often because they are 1 mile from our house. It isn’t uncommon for me to stop there 2 or 3 times a week after work to pick up the essentials. Just doing that gets us to about 10 trans a month I’d say. Or we hit up 3 different places within a 1 or 2 mile area around our house to get the different grocery sales at each. (Wal-Mart, Fareway, and Hy-vee are all within 2 miles of eachother) So I could probably guess that we get real close to the 15 transactions just in grocerie shopping each month.

Another thing, I’m not exactly for sure how these fees are charged but I have been under the impression that the merchants pay a percentage of each sale. Not a set fee each time. Therefore whether you charged $30 in one pump or $10 in three separate ones it would still be the same percentage the merchant would pay. But like I said, I’m not exactly sure how those fees work. I don’t pay them so I don’t pay much attention I guess. I would be interested to find out though if anyone on here knows!

the math: (for someone who spends $1000 per month):
Credit card:
1000 spending times one percent=$10, repeated each month of the year=$120 on an average expenditure of only $1000 per month.

4% Rewards Checking
$1000 average checking balance times 4%/12 =40/12=$3.33 interest earned per $1000 per month, or 12*$3.33 interest per year which is $40

(this is not quite accurate for a number of reasons that aren’t that important but if you’re mathematically savvy you’ll see that if you only have $1000 to your name then your average checking balance will end up being around $500, not $1000, but who cares for this analysis.)

The point here is that if you have 3x this balance, or a total of $3000 in the bank, then your interest earned will be $120 and is equal (disregarding taxes of course) to the rewards on a 1% rewards credit card.

So…just keep 3x your average monthly expenses (or, preferably, keep a lot more than that) in your rewards checking and use that debit card 15 times per month and you are way ahead of the game.

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THE TRUTH for me though is that up to now it has driven me crazy to come up with 15 spending events during the month. I literally do not spend money or go shopping 15 times per month so I have opted out of this plan because I have up to now refused to sit by the gas pump pumping 3 gallons 3 times in a row, effectively costing the service station extra transaction charges, just to make my “nut” of 15 debit transactions and get 4%!

Maybe I’ll do it in the future though and every once in a while “make up” for it by buying a couple of quarts of motor oil from the station that I normally wouldn’t have bought (because I usually buy my oil on sale by the case).