By Martha C. White
July 31, 2019

Green Dot is one of the biggest players in the prepaid debit card market, and it is expanding into more traditional banking with an online account that features some eye-catching numbers: A 3% interest rate, and 3% cash back on online purchases.

Deposit account interest rates are still low by historical standards: As Money.com’s “Dollar Scholar” Julia Glum recently noted, many savings accounts pay next to nothing in interest, and any account with an interest rate of 2% or higher is considered quite good nowadays.

A new savings account from Betterment has one of the highest yield in the market lately, and it pays 2.69% interest. (Pro tip: Since online bank accounts have less overhead and can often offer higher interest rates, parking your savings in one of them can earn you a higher yield than a savings account at a traditional brick-and-mortar bank.)

In other words, that 3% APR on the new Green Dot account — officially called the Unlimited by Green Dot — is sure to attract attention. Plus its purchase-rewards earnings rate of 3% is higher than you can get with a typical cash back rewards credit card for day-in, day-out transactions.

But like so many online relationships these days, the new Green Dot product is more complicated than we’d hope. A perusal of the fine print for the Unlimited by Green Dot uncovers some important caveats that you should consider when determining if this new account and Unlimited Cash Back Bank Account Visa Debit Card that it comes with are right for you.

For starters, this is an account you’ll have to commit to: You can’t actually collect on that 3% cash back or the interest you’ve earned until you’ve kept the account in good standing for a full year. (With other cards and accounts, you can get your cash back monthly.) What’s more, while this probably isn’t an issue for most people, the 3% APR on deposited funds only is applicable to the first $10,000 in an account.

Keeping that (at minimum) year-long commitment might be more expensive than you think too, because, like many other prepaid debit accounts, Green Dot comes with its share of fees.

Most importantly, if you don’t use the Green Dot debit card to make $1,000 or more in qualifying purchases each month, you’ll get dinged with a $7.95 account maintenance fee every month — which Green Dot execs told CNBC is one way the company plans to turn a profit on this new offering.

Another key piece of information is that only qualifying online and in-app purchases count toward the $1,000 minimum. So standard in-person purchases involving a physical swipe of the card — say, at the supermarket, or Starbucks, or a restaurant — do not count.

Even if you do much of your shopping online, as many of us do these days, you might be surprised at the fine-print list of what else *doesn’t* count towards that spending threshold.

Green Dot says electronic purchases made via retailer websites or apps (think Amazon, Target, Netflix, etc.) using the card or account will count towards the $1,000 monthly spend requirement and accrue cash back. But you won’t get cash back for using the Green Dot debit card for paying your regular monthly bills online. Green Dot may tout the convenience of its site and mobile app for paying bills, but neither desktop nor mobile bill payments made on the Green Dot platform count towards your monthly spend or qualify for that 3% cash back. Green Dot also stipulates that airline purchases aren’t eligible to earn cash back.

Depending on your shopping habits, these caveats could make it hard to accrue that $1,000 in spending every month to avoid the $7.95 fee.

That said, a 3% yield is considerably higher than we’ve seen recently offered for an online checking account, especially for small balances. (Yes, the new Green Dot account offers checking, though you have to pay $5.95 for a pack of 12 checks.) ,

People who buy everything from groceries to gadgets online and make frequent use of digital services like entertainment streaming (and who make sure to pay through that vendor’s own platform) could conceivably hit that $1,000 in monthly spend without their wallets breaking a sweat. But it pays to evaluate your spending habits and do some math before you jump in with both feet.

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