I Can Get a Higher Interest Rate on Checking by Using my Debit Card More. Does This Violate Clark’s Debit Card Rule?

Welcome to Ask Clark, a column designed to answer your financial questions, by money expert Clark Howard.

Using My Debit Card More Will Get Me a Higher Interest Rate on Checking. Should I Go For It?

Tom from Illinois says: “I know how much you hate ‘piece of trash’ debit cards. However, my credit union offers 1.75% [interest] on my checking account up to $25K as long as I can use my debit card 12 times per month.

“My wife and I both take advantage of this and earn close to $900 a year in interest. I don’t make unnecessary purchases just to get my interest every month. In this low-interest rate environment, it seems like the best place to put some excess cash to work.

“We max out our 401(ks) and Roths, so we can’t increase our retirement contributions. Please let me know if this is something you would be comfortable with, or is it too risky with the ‘trash’ debit cards?”

Clark’s Take on Using a Debit Card To Qualify for a Lower Interest Rate

Clark says: It’s OK to make an exemption toward his no-debit card rule as long as the benefit outweighs the risk.

“Yes, there is a calculated risk using the piece of trash fake Visa or fake Mastercard or debit card, because you don’t have proper legal protections like you do with a credit card,” Clark says. “But that is a potential risk where you have a known reward, getting the much higher than market interest rate. It’s worth the risk to get the reward!”

To hear Clark’s full take on this question, listen to the segment:

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If you have a question but don’t want to go on the air, contact Clark’s Consumer Action Center for free money help.

More Resources From Clark.com:

• These Are the Credit Cards in Clark Howard’s Wallet
• Clark Howard: My 7 Rules for Using Credit Cards
• Best Rewards Credit Cards: Team Clark’s Picks