Here's the rub, you're not getting 3+% on your OUTGOING money, you're getting 3% on what remains in your account. So let's do a month by month example to better illustrate, simple numbers. You put $1,000 in your account on 1/1 You spend throughout the month $400. At the end of the month your balance is $600 Assuming a monthly compounded interest rate you'd get interest of 3% of $600. I put $1,000 in my account on 1/1 I spend throughout the month $400. At the end of the month my balance is $1,000. My credit card balance is $400 Assuming a daily compounded interest rate (common for MMA) I'd get interest on $1,000 Then pay off my credit card (which gets a 1% cash back, 5% for certain purchases) and earn minimum 1% of $400. So after 1 month I've earned interest (or cash back) on $1,400 ($1,000 2%apy 1 month = $1.67 + $400 1%apy 1 month = $.33) You've earned a slightly better interest rate on $1,000 ($600 3%apy 1 month = $1.50) Because of a larger AVERAGE balance (and daily compounding) I'll earn $2.... you'll still earn $1.50