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2012 State of High Yield Reward Checking Accounts

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Several years ago, I remember talking with a reporter about these new checking accounts that offered seemingly ridiculous interest rates. Consumers were so used to earning absolutely no interest on checking accounts that the prospect of earning just half a percent seemed too good to be true. So when these obscure banks started offering interest rates of 5%, it seemed like a scam. As I dug a little deeper, I discovered how these banks were able to offer these rates.

To review a bit, reward checking accounts are like regular checking accounts except they “reward” you for following the rules they’ve outlined. If you fail to satisfy all the conditions, you don’t earn the juiced up interest rate, you get the regular, often minuscule, rate. That rate, however, is often better than what you’d get at one of the big national banks, who often offer nothing.

Common requirements are that you sign up for online banking and paperless statements. Many require you to make a certain number of debit/check card purchases, usually ten or more. Some will require some bill payment through their online bill payment system. These are all designed to lower costs (paperless statements) or increase revenues (off fees they make from check card purchases) so that they can offer you increased interest.

Sadly, they’ve fallen on some hard times with the general fall in interest rates. If you thought interest rates at online savings accounts took a hit, you probably haven’t seen the rates of high yield reward checking accounts recently. Depositaccounts.com has a list of the highest yielding ones and the list tops out at 2.01% APY, a far cray from the 5% that was available several years ago. While they’re still offering more than online savings accounts, it’s hard to justify the added hassle for only a small increase in interest.

Do you use a high yield reward checking account? Or do you think it’s too much work for too little gain?

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24 Responses to “2012 State of High Yield Reward Checking Accounts”

  1. cubiclegeoff says:

    I use a rewards checking account and I’m happy with it. My rate is 2.97%, but since my bank was bought by another bank, they don’t advertise the account anymore (at least anywhere I can find it). The extra work to get the rate isn’t that big of a deal, 12 purchases, get online statements and deposit money electronically once a month. And since I have less than the $25,000 threshold, it makes sense as a savings account compared to the others out there and the others I have.

  2. Matt K says:

    way too much work. i opened one last year in hopes of taking advantage of a better interest rate than anyone else could offer. I found myself spending more than I was earning interest in… and it’s not necessarily stuff I would be spending money on…(pack of gum, a bottle of something that I would usually get in bulk). I felt forced to spend that money, and it wasn’t a good feeling.

    • Strebkr says:

      Could you have used your 10 purchases on things you normally buy (gas, groceries, etc)?

    • cubiclegeoff says:

      I usually break up larger bills, like the phone bill, and pay a small portion with the debit card and the rest on credit. Then when I do other small purchases, I use the debit, but I don’t go out of my way to do it. I haven’t had a problem and I make more with those $200 or so in debit purchases because of the interest than I would with my credit cards.

  3. Anthony says:

    As of today, my credit union is offering 3.51% (http://www.kasasa.com/hope/accounts/cash), much closer to the 5% of old.

    I don’t think it’s too much of a hassle. I shop for groceries weekly (4 transactions a month) and purchase gas every other week for each of the two household vehicles (another 4 transactions a month. Add in my water bill, my phone/TV/Internet bill, and my electricity bill, that’s 11 transaction each and every month.

    • samor007 says:

      Great tip, unfortunately this bank is not accepting residents from Washington State. only LA, AK, Tennessee and 1 other one.

  4. Strebkr says:

    You have to decide if you can play by the rules. Once you decide you can you need to see if its worth it. For example, lets say you have 5,000. The normal rate might be .5% and the bonus rate might be 3.5%. So in a given month you could earn $2.08 or $14.58. The difference between the two, is $12.50. So the real question is…..is all that work worth $12.50 to you? I can’t answer that for you. I don’t know what your time is worth. For me the answer is NO. For lots of other people I know the answer is yes.

    What is your time worth?

    • Sun says:

      Your time is worth less than you think if you calculate that you are potentially productive 16 hours a day, 7 days a week. (Sleeping 8 hours a day.) So, someone making a net of $40k/yr would be $6.85/hr. That is two hours of work for that person. Personally, I would not buy groceries and modify your behavior. Just buy Amazon gift cards in small increments as a scheduled gift card to yourself to meeting spend requirement. Or some other creative way.

  5. Jason says:

    This is clearly an arguement of making your money work for you. If you change your spending habits in order to get the interest it may not be worth it. If you have 20k in cash, its hard to ignore getting 2% interest on it vs. .2% in a standard account. As far as what your time is worth, well, quite a bit, if it only takes a change from chosing your 2% interest on your savings balance, vs your 2% cash back on what you spend using a rewards credit card. I find it very easy to get the minimum requirements of 10 debits a month. Typically two tanks of gas, work lunches, small purchases easily get me there. I still use my AMEX for large purchases or my CHASE for 5% bonus

    • Sun says:

      I use credit as well for those reasons. I know people that don’t have access to credit or don’t want to use credit, use their debit cards instead. PerkStreet for example gives 2% cash back on purchases if you can maintain $5k or more per month (otherwise 1%). This is the alternative to rewards checking. You can earn cashback by spending. They argue you can earn more back this way instead of relying on interest.

  6. zapeta says:

    My account still pays 3.01% for the qualifying rate and 0.25% if you don’t meet the 12 debits, 1 direct deposit, and estatements requirements. I don’t have any problem meeting the transaction requirements, I just put a few things a week on the card and no problem. For me, the difference in interest is significant and very much worth my time.

  7. eric says:

    I still have one but from the good ol days of 5%. Now it’s half that but I still do it. I’ve developed a system to satisfy the requirements that takes under 10 minutes so I don’t mind as much as I used to do. Still wish the interest was higher though!

  8. Phil says:

    My high yield checking is not as great as it once was but it beats your typical big bank checking account any day of the week. I get 3.01% on 25k and free ATM withdrawals from any ATM in exchange for 10 POS transactions, 1 electronic deposit and 1 website login.

    It doesn’t take any extra work now because I ended up migrating much of my big bank activities to my high yield checking account.

  9. govenar says:

    The 2.01% APY shown at depositaccounts is for nationwide accounts; if you select a particular state you’ll find the higher rates (but still lower than they used to be, and sometimes the local banks are hard to qualify for unless you happen to live near their city).

  10. Sara says:

    If anyone has a high interest checking account I would like the name so I can see if I qualify- I’m in Washington state. thanks

    • Jeannine says:

      Prevail CU is still at 3% up to $10,000. Best of my Washington state accounts. Im WA resident too. I have some out of state up to 4%. Just afraid if gets too busy will drop rate. Most out of state only allow out of state for short period of time.

  11. axaa says:

    I have been using these reward checking accounts since 2009 and enjoyed the good old days when APR was 5 %. Now the APR is going down gradually and has dwindled to 2.15% and 2 % for the 2 FCU that I have account with. So for me it is total 20 debit transactions per month.

    The easiest way is to do these debit transactions is by going to a grocery store SELF CHECK Out station and breaking the single transaction in 3 or 4 . So I would scan 2 items then checkout, scan next 3, checkout … I do 3 or 4 checkouts at a time , depending on how many people are behind in queue. So choosing a time when grocery store is slow is also key.

    Second method is pumping gas at the gas station ( if you are in a state where you can pump your own gas .. .ie. NOT NJ). If you have to fill $ 12 worth of gas , then you can make 3 transactions of $4 each. Beware that some gas station chain do not accept your card if you do 2 or 3 consecutive transactions , probably due to security reasons.

    All this work was worth it when APR was 4-5 % and you could make more than a grand per year. But now with 2 % APR its just a pain.

    Also note that these high yield APR are usually offered by small local banks/ credit unions . So do a proper DD on what is the default risk for these institutions. When I opened up the account I gave up on the 4 % APR offering bank to go for a 3.5 % one because of its stability and years in business.

    good luck

  12. Cindi says:

    Definitely worth it if you use your debit card anyways. For me using the debit/credit card is just a way of life. I use the online bill payments and just use the card for everyday purchases. Unfortunately my high interest has dropped to .25% for using all features. Now it is not worth it to me because my checking is out of state. Going to bring my money back home.

  13. Catherine says:

    One question, I have of one these banks with high interest checking. However, the high interest is only up to $15,000. Do you know of any banks that give high interest on checking accounts with over $15,000?

    • Jim says:

      Usually no, they cap it at that because they can only earn so much from your charges… esp. with the new swipe fee laws.


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