I opened a Chase checking account yesterday. I needed to set up a local bank account because TCF wanted to charge me a fee to use their ATMs since my account was opened in Illinois. In order to avoid that, I would have to open a new TCF account down here, and since their branches are hard to find and the closest one to me is really difficult to get to, it made little sense to do so.
I already switched over to using ING Direct’s checking account for all of my ATM and check sending needs and they are AMAZING! I freakin’ LOVE ING!! I have free ATMs in places I never imagined I ever would with them, AND they pay me interest on my checking account! But, I needed a convenient way to cash physical checks. Enter Chase.
I wouldn’t have gone with Chase, but they run the show down in the Phoenix area here. In addition, they sent me a coupon good for $100 if I open an account with $100 or more. I just got a $57 reward check from Citi card so I thought I’d deposit that, some ING checking cash (thanks to the seemingly endless supply of ATMs at my disposal) and cash in on that reward. Seemed like a solid plan to me, and in the end it was. But it had its hassles.
As I was signing everything and feeding the teller all of my info to get the account going, she asked me if I wanted to sign up for a rewards debit card. I asked what the rewards were, and she explained that for every dollar I would get 4 points. When I asked how the points translated to cash, she said that 2500 points is $5. OK, so $1 is 500 points. And I would get a bonus of 2500 points. And I would also have a chance to get whatever I was buying for free; a promotion they do on a random account every 5 minutes. Sounded OK with me.
Then she mentioned there was a fee. “How much does this cost?” I asked. “$25 a year” she replied. I couldn’t think of the exact translation at the time, but I had a feeling that it wasn’t worth the entry fee. I asked “can I get a normal debit card for free?” She gave me this stunned look and explained the rewards again. “Look,” I said, “there’s no way I’ll recoup that $25 fee, so it makes absolutely no sense to do this.” She tried to explain that I would because I would be using the card all the time.
So let’s look at the numbers a second. $1 is 500 points. The annual fee is $25, so I would need 12,500 points just to cover the fee. I get 4 points for every $1 I spend, so I would need to spend $3,125 a year just to cover the entry fee. And after that, I would have to spend $125 to get $1 back, which means I would be getting 0.8% cash back….. AFTER I spent $3,125. So, in practice, I would be earning far less than that already pathetic 0.8%. And on top of that, they only pay out their rewards in $100 increments. Best case scenario, if I spent $15,625 on my debit card in 1 year, I would make $100 back. Every year I DON’T spend that much, I have to again recoup the $25 fee, which would further reduce my payout. Translation: I would NEVER earn the rewards.
In contrast, I get 3% cash back on all gas purchases and 1% back on everything else with my Discover card, who pays me in $20 increments. I’ve already claimed $60 in rewards this year alone with them, it’s great! I get 5% back on drugstore and grocery purchases and 1% cash back on everything else with my Citi card, which pays out in $50 increments. This is my backup card and that $50 mark is a little tough to hit, so I almost never use the card. Either way, both of these cards have MUCH better rewards, and neither charges a single fee for use as long as I don’t carry a balance, which I never do.
TO summarize, if I spent $15,625 in one year on the Chase debit card, I would get $100 back. If I did the same with my Discover card at 1%, I would get $156.25 back, $140 of which I could claim. That’s assuming I buy no gas for 1 year too, which is pretty unlikely. My reward with Discover would probably be closer to $200, or twice what Chase would give me. And all without a fee. No thank you, Chase!
As icing on the cake, after I finally made her give me the basic, free debit card, I was told I would still get 1 point for every $1 I spent, which is ridiculously low, but it’s better than nothing, and since I don’t use the debit card, I don’t care either. But the best part was when she told me that the free purchase reward they do every 5 minutes, a detail she kept using to sell me on the “reward” card, was also given to me on the free debit card! So, there was absolutely no reason to ever get a Chase reward debit card!
She also tried to sell me on the savings account, in which I had to keep a minimum of $300. I told her I just wanted a checking account, and she gave me a very concerned warning about over-drafting the checking account. I smiled and said it wouldn’t be a problem. And it won’t, I have no intention of using the checking account for anything but cashing checks. Why would I use it for anything else when I get so much more through ING Direct?!
The lesson here: if you open a Chase checking account, or any account for that matter, be well aware of anything they are charging you to use. Chances are pretty high that you’re being ripped off.
14 comments ↓
Wow, thank you so much. I just opened an account two days ago and got the rewards card too. I said yes cause I thought that I would be getting rewards all the time. I definitely won’t be spending more than $3,000 a year, I’m a freshman in college. As soon as I get it in the mail I’m going to downgrade it to a regular debit card which I should have done in the first place.
No problem. Glad someone found the post useful. Good luck with the downgrade, and if you have the credit and can avoid spending more than you can afford to pay, consider getting a credit card that’ll earn you some rewards. I really like my Discover card (even though they’ve since raised the rewards payout to $50…) for rewards, but the Citi card isn’t too bad either (despite the fact that I don’t like the company). There may be better cards out there too, just look around.
Hey, just wanted to say thank you for this post too! I upgraded my debit card to the rewards program as well, before I actually did the math to figure out how much $25 would be in their points. It’s definitely not worth it to get on their rewards program. Thanks for making a post so clear and to the point so that it’s easy to understand, and helped me avoid a “scam”! :]
Oh that was so helpful! I was just about to do that this second until I saw there was a fee involved.
First off it’s an annual fee and they also have a FREE debit card that does the same rewards program! Obviously someone doesn’t know how to ask questions! I love chase they rock! Screw your ing! They are a horrible bank! They rank right up there with bank of america! I did the same promotion as you only opened my account with 25.000, as soon as my account got up to 100.00 they deposited the 100.00 reward in there. Not to mention ya dumbass that ANY BANK YOU GO TO IS GOING TO TRY AND SELL YOU ON THE EXTRAS THAT CHARGE YOU!! HOW THE HELL ELSE ARE THEY SUPPOSED TO MAKE THEIR MONEY?!?!?!?! You really are a sad emo kid… go back in the corner of your bathroom and get your straight razor out…
thanks for your post! I went to chase the other day to get my “free” checks, which turned out not to be free, cause my last check order (from 2003 with wamu, the box lasted 7 years) were for duplicate checks, and even though I asked if the checks were free, and the teller said, yes, you get one box free checks per year, he didn’t ask, nor tell me that it’s ONLY for regular checks. Anyway, first order had misprint, so I went back to get replacement checks, then found 2 charges for $18.95 each for “check order.” Couldn’t refund over the phone, and had to go back to the branch (3rd time now). While I was at the branch straightening this out, the rep had the nerve to “sell” me the $25 debit rewards card, since I was already annoyed, I just said no, but now that I’m calmer, I decided to research what it’s about, and found your post, REALLY REALLY helpful. Cause the rep said something like, since he signed up in November (about 4 months ago) he already has 50,000 points, and I didn’t bother asking for the $ translation, cause I just didn’t care. I don’t use my debit card that much to pay for anything, other than to take $ out from ATM. your post was totally on point, thanks again!
I’m glad someone does the simple math. This thing was pushed on people like my mom, who when I asked for the conversion rates didn’t know, She just thought it was a good idea because she spent a lot through her debit card. Looking for the details of the program I found your post, thanks for writing!
I am unemployed, I turned in my rewards but never recieved anything. The lady that pushed the reward card told me her mother collected 100.00 dollars around Christmas time. Today my account is in the negitive because of the 25.00 fee the bank charged for the card this year.
Of course the rewards card isn’t for everyone, but your rant here is quite pathetic and childish. If you don’t spend $3k a year thats sad. How do you live? That’s $250/ month. Are you 12? Are you living on allowance? The minimum gift redemption value is $5, and the minimum cash redemption value is $25. Chase makes no money on your annual fee, the annual fee is charged to help pay Chase’s bill to the federal government, part of the crack down on banks. They had to page a huge charge for debit cards. Chase makes money from merchants. You go somewhere, make a purchase as “credit”(pinless/signature sometimes required), the merchant must pay a fee to visa for processing the payment, now visa pays a portion to Chase as a thank you for the merchant paying the fee. The fee is very small, but it adds up when you have trillions of transactions, each resulting in a fee paid to visa or mastercard.
If you make just $20k a year, which is almost a standard minimum for an entry level, full time job. You can use your debit card to pay the electric bill, gas bill, car payment, cell phone, gym membership, tanning membership (any club membership really), auto gasoline, groceries, fast food, you name it.
By the way, youre an idiot for talking about never making money back, when Chase paid you $100 to open the account in the first place.
Also, the “free” chase account is only free if you setup a direct deposit or make 5 purchases with you card, a detail they hide until you sign…
They have an online calculator:
https://www.chase.com/ccp/index.jsp?pg_name=ccpmapp/individuals/debit_cards/page/realcash-calc
the only was you can get 3% cash back is to spend $1K+ a month (12K+ a year), and if you do so you’ll around $360 – $25 fees = $335.
Bottom line, Chase reward program is good for people who spend around $1k+ a month.
Well you see, there is a different between debit and credit card. Take a look at chase freedom card, and compare it to Discover. which is the same.. you are comparing debit to credit card which is like apple to orange. Of course, debit card will not give you so much in rewards, as they don’t earn through APR and some had pay you interest some more.
HA! I had no idea this would generate so much controversy. It was just a rant on my stupid blog that I didn’t think anyone would read. I must be up pretty far with some Google keywords I guess. Apparently a lot of people have this offer foisted on them.
I had considered responding to some of the posts, but I don’t know that I care that much. I will point out that Chase raised their minimum direct deposit requirement to $500 to avoid fees, which is enough to prompt me to leave them. Apparently they don’t want my money, and I’m happy to take it to another bank (and get more money for opening the account too).
Also, this was posted almost 2 years ago, and things have changed since then. I no longer get as great of a reward on my Discover card, though I suspect I’m still doing better than the Chase rewards. And I’m sure things are different with the Chase rewards too. Some of what I wrote back then may no longer apply (like the $100 payout increment, as someone pointed out). So, do your own research, this is all based on my experience back in April of 2009.
I will also say that I’ve since gotten a Chase Freedom credit card, and their rewards are actually pretty good. Plus, I got $150 to basically sign up (I had to spend $1000 in 3 months, which I did in the first month easily). So, I’m not saying that ALL of Chase sucks to deal with, just that my experience with their banking arm keeps getting worse and worse. I’ll be closing my checking account with them as soon as I’m done closing on my house.
Hassen, thanks for posting that calculator. I actually wasn’t aware that they had a sliding payout like that. If I made ALL of my purchases on my debit card, it actually would pay off. That 2% @ $500 figure would be pretty easy, 3% @ $1000 might be tough.
But, here’s the rub. If you’ve ever had to deal with someone stealing your credit card number before, you may know that you aren’t liable for those amounts. They’ll close your account, credit the transactions and send you a new card. This is Federally mandated as I understand it, and it’s provided to you for free with any credit card (I could be wrong, but I’ve never had a card where this wasn’t the case). This isn’t the protection they always try to sell you (that’s a whole other topic), this is simply something you get when you have a credit card.
However, THIS IS NOT TRUE FOR DEBIT CARDS! When the money is spent, it’s gone. Unless you are paying for some kind of purchase protection (which I don’t know that all banks even offer, though I suspect Chase does, and this would further eat in to your net rewards), you’re out that money with no recourse. So, you’re taking on a lot of added risk using only your debit card to make all of your purchases. The more that card number is used (and saved on different systems), the more chance there is of someone stealing it, and the more chance of you losing that money.
But that’s a bit of a digression. If you’re spending $1000.00 or more a month on the card the rewards program might actually make sense for you, but only if you are spending enough money in their RealCash categories. These include Grocery, Gas, Coffee, Fast Food and Drug Store. Math Time! For me, I would spend maybe $400/mo on those categories (and that’s a high estimate), which at 3% would net me $144.00 a year, minus the $25.00 fee, I’d have $119.00 total net rewards, which isn’t bad (and I’d actually be able to collect that). But, spending $1000.00 a month and getting just 1% on ALL those purchases would net me $120.00 a year, and that’s assuming that it’s all just the base rate of 1%, which is not the case since I get a higher percent on some purchases. Plus, if I have any months where I spend less than $1000.00, the flat 1% payout would look even better since I’d only be in the 2% bracket with the Chase rewards.
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