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High Interest Reward Checking Accounts
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Last December, I looked at a random reward checking account trying to determine whether reward checking accounts were worth all the hassle. My verdict was that they were worth it because they offered such a fantastic rate of return on a checking account, with most of the headache focused around the debit card transaction requirements. Well friends, it looks like I’ve learned of a simple way to get around that requirement – donations.
Basics of Reward Checking Accounts
The idea behind high interest reward checking accounts is that you can earn a higher rate of return, typically in the 5% APY range, by satisfying some simple conditions. The two most common conditions are 10-12 debit or signature based transactions using the debit card each month and an ACH direct deposit or direct debit each month. If you satisfy those two, you get the higher rate. If you fail to satisfy those two, you get a much lower rate. The banks earn money on the fees they charge on the debit transactions, which is how they can afford the higher rates. The rates are often higher than savings accounts rates, certificate of deposit rates, and money market rates.
Meeting Reward Requirements
Many charities will let you donate a minimum of $1.00 via credit card, so the quickest way to hit ten transactions is to make ten $1 donations each month! At the end of the year you end up with $120 in donations that, should you itemize your taxes, you can claim as a deduction. The charity will end up with a little bit of money, the part of the $120 that isn’t consumed by fees, the bank still gets its fee money to help subsidize the account, and you get your high yield. Some charities will even let you schedule regular donations so you don’t even need to remember to donate the funds each month.
Need some ideas? Try these charities (there are plenty, chances are the ones you support will accept $1 or $5 donations too):
- The Humane Society of the United States
- Safe Harbor International
- The V Foundation
- AIDS Research Alliance
- St. Jude’s Children Hospital
By donating more than a dollar, you ensure that the charitable organization you are supporting won’t lose money on fees. While much of the donation will be consumed by fees, it’s still a net positive for the charity.
The Best Reward Checking Accounts
The rates in this post are out of date. Please check with the bank to get up-to-date interest rates.
If you’re looking for a high interest rate reward checking account, here are a few ideas:
Evantage Bank – Their Rewards Checking Accounts offer 5.25% APY on balances up to $10,000 (2.25% APY on amounts over $10k) if you make 10 Evantage MasterCard CheckCard sales transactions a month and opt for electronic statements. There is no listed interest rate amount for failing to meet those requirements. No minimum balance, no monthly fees. Evantage is the internet banking division of Southwest State Bank, FDIC Certificate #4195.
Bank of the Wichitas – They offer a Wichita Rewards Checking that earns 5.25% APY on balances up to $10,000 (2.25% APY on amounts over $10k) if you make 10 Bank of the Wichitas VISA CheckCard sales transactions and opt for electronic statements. You earn only 0.25% APY if you fail to meet the requirements. No minimum balance, no monthly fees. Bank of the Wichitas is FDIC insured under FDIC Certificate #4198 and has been in business since 1913.
AmericaNet Bank – Their Rewards Checking account is similar to Evantage and Bank of the Wichitas, 5.25% APY on balances up to $10,000 (2.25% on amounts over that) for 10 AmericaNet Bank VISA CheckCard sales transactions and electronic statements. If you don’t meet the requirements, you earn only 0.25% APY. No minimum balance and no monthly fees. AnericaNet Bank is listed as All America Bank and covered under FDIC Certificate #20093.
First New England FCU – They offer a high rate checking rewards account that earns 4.15% APY on balances up to $20,000 (2.00% APY on amounts over $20k) if you satisfy their conditions, otherwise you earn 0.10% APY. You must make 12 cleared debit card transactions each month, setup a direct deposit or ACH auto-debit, and enroll in eServices. There are no minimum balance or monthly fees.
As you can see, most of the offers are similar so you should be able to find a good rewards checking account from the list of the four above. I personally think the 10-12 debit card requirement can be a bit of a hassle but if you do small donations or just sit at a gas station long enough, they are fairly easy to satisfy. Is it worth that “work” to earn above 5% on balances up to $25,000? That’s for you to decide.
(Photo: pocheco)
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I usually maintain a very minimal checking account balance and not a lot of transactions (i’m a CC guy) so a lot of these offers don’t apply so much to me. I have my main checking account at my credit union, which offers a very minimal interest rate. Since I have a loan with them and money market account with them as well, it’s best to try and keep everything in one spot.
Durimg economic crisis as well as consumer and other forms of investment fears i beleive it is important always to get a range of insitutions aa well as the best available deals and spreading the risk.
thus for example its a little like buying a house, all options should be explored and it is key to spread the risk and do as much due diligence as possible/
I’ve been thinking about looking into high interest reward checking accounts for a little while now. I was under the impression that only credit unions had these high interest checking accounts. I will most likely look into these checking accounts.
What interest is paid on reward accounts? Listed as 5.25%
What is % pay back on credit card transactions?
Call me at 805 201 2915 if desired
Great suggestion for using charitable contributions to achieve the minimum required number of transactions. Hopefully people will go for more than $1!
The question I have is: How much minimum do you have to maintain in your account for it to be worth opening an account? Assume the 10 $1 transactions monthly and that you want to beat a separate savings account that earns 3%.
I do NOT like math and definitely do NOT do finance, but I get roughly $5000…. Is that close?
Anthony,
My basic calculations show that $5,358 is the break even point between earning 3% (compounded monthly) and “losing” $10 per month then earning 5.25% (compounded monthly). I think most accounts earn interest daily, so this number is not entirely accurate.
Another thing to keep in mind is that the $10 can be deducted from your taxable income each month, so the “break even” point could be closer to $4,000 depending on your tax bracket.
Now I have a question:
When interest rates go back up, will the rates on these high-reward checking accounts rise, too? In other words, is a high-reward checking account a sustainable savings strategy, perhaps for an emergency fund?
Great idea. I wouldn’t put it in terms of a “break-even” point with these transactions. If you give to churches or other charities already, the costs are already calculated into your budget to begin with.
Another additional idea is to set up auto-pay on certain bills (utilities, credit cards, student loans, insurance premiums, using your debit card # instead of a bank account routing number. When you include your mandatory gas station fill-ups (8-10/month in my household), meeting the necessary threshold shouldn’t be that difficult.
We just switched our accounts to a 4.00% checking option. Other banks obviously have higher rates, but this was our local bank and our accounts do not have to change. We preferred the convenience of keeping our same accounts over switching banks for the extra 1% interest.
Great article and great idea! I plan on using it.
I found a good rewards checking account from Coulee Bank. With 5.01% APY and nationwide availability I think it is one of the better ones around. Check it out at http://www.CouleeBank.com
This is indeed a good rewards checking, easy to move money in and out. I also highly recommend this account.
the rewards checking rules are ridiculous.
If you use your checking account frequently most people meet many of the rules already. Banks will reward you for meeting rules. Plus, many accounts save a lot of paper waste because they require online banking. That’s a good thing in my opinion.
Great article, and thanks for the examples of good high interest reward checking accounts. I’m always looking for new ways to best handle my money without too many financial headaches. Have you heard of CheckingFinder? It’s a website you can use to research high yield checking accounts – you can type in your zip code and compare rates and requirements for select community banks nationwide. It might be of use to people as well.
Another winning article, thanks Jim. I must be deaf to advertising these days (thanks, Tivo!) because I had no idea these accounts even existed.
It seems to me that if you (I) can meet the requirements without too much hassle, going this route makes even more sense than my previous plan of Interest Bearing Checking + Online Savings Account. 5.25% (checked Evantage from article on 3/5/09) beats the pants off of 1% checking and 3.75% savings.
As to meeting the requirements “organically” (without micro-donations to charities every month), it should be easy enough for anyone to check their current status. I went to my current Bank Account site, and checked the number of POS transactions for each of the last 6 months.
My lowest month was Jan 2009 with 13 transactions, my highest was Oct 2008 with 44 (Christmas shopping no-doubt, hah).
My average was 26 / month.
This looks like a winning idea to me. Does anyone see any “gotchas” I am missing?
Also, small update to the article text, regarding Evantage:
“There is no listed interest rate amount for failing to meet those requirements.”
When I checked today, their site says “.25% APY if requirements not met.”
What’s funny about that is… even .25% is better than the big fat zero I get right now from my local bank. Sheesh.
Doug
I did not know about this type of checking account, too. Great article! I hope I can take advantage of the higher interest rates.
I just started “checking” the internet to gather more information. One source said the bank is “banking” for most people to make mistakes. Otherwise, the banks would go broke if everyone was right on the money meeting all of the requirements every month. I guess one little mistake would do you in.
Another concern is the legalese. I wonder if you almost have to have a lawyer to look at the fine print.
You would sure have a sick feeling in your stomach if you lost a lot of money due to some technicality you weren’t aware of. You’ve got to know these terms and requirements backwards and forwards.
Look at the AIG scandal. Someone, like Congress, sure didn’t look at the legalese. These sweet, nice AIG folks will get their millions. No doubt I will probably be docked when I try to get my interest income. Wonderful!
I’m going to look into this, though.
They don’t go broke if you follow all the requirements, they make more on the transaction fees from the debit card than they will pay you in interest, that’s why the system works.
PLEASE do not recommend the Humane Society of the United States for donations! They are NOT a Humane Society – they are an extremist group of so-called animal rights activists. Do some research! They are pushing legislation to eliminate the breeding of purebred dogs in the United States.
They are not concerned with animal welfare, although they try to appear that way – their agenda is to eliminate the ownership of companion animals.
If you are going to recommend charities for donations please do your homework first.
So just because they want to eliminate breeding their an ‘extremeist’ who doesn’t care about animals?? Give me a break. Breeding should be illegal, there are way too many animals out there that don’t have homes and are being put down every day. Then you have these ignorant people who go out and spend hundreds or even thousands of dollars to buy a ‘pure bred’ dog. Completely ridiculous. I’m donating to the humane society Diane, and I’m proud of it.
Diane,
I completely agree with Brian. It’s sad that some people feel the need for a “pure breed”. A dog isn’t for show, or to brag about its background. He or she is part of the family. And to claim that the Humane Society is not humane…bizarre. Breeding, pet stores, “renting pets” should all be illegal. As Brian stated, so many shelter animals need a home and they are so grateful for being adopted, but you need an animal of “pure breeding” –what does that give you?
FYI..muts make the best companions
Why shouldn’t they have a pure breed? Breeds were made for a reason: to serve a purpose. I’m sorry, but your mutt isn’t going to hold a candle to my border collie when it comes to moving the cows. Nor is it going to fetch the paper or pick up the purple ball instead of the yellow one on command.
Need a good hunting dog? How about one to protect livestock?
Breeds are very much important and very much viable. That a majority of Americans have retreated to mundane urban or suburban lifestyles doesn’t change this fact.
A part of the family? Perhaps. But so much more to those of us who are still forging the bonds that brought man and dog together in the first place.
Answer to the first question, “why shouldn’t they have a purebreed”..was already answered in both Brian and my feedback. Too many homeless dogs now.
Second, my mutt could pick out one ball from the other. And I don’t hunt, so I don’t need a hunting dog. And, if “researched”, any dog is trainable.
Third, we can disagree, but there is no reason to attack us for not sharing the same beliefs or values. To insinuate that “most Americans live mundane lifestyles” is elitist, arrogant,prejudiced, and subjective.
And, “part of the family perhaps”? There is no perhaps. Our animals “are very much” part of the family. I, and others like me, (who do not lead mundane lives), would do anything for our animals.
Man forged a relationship out of neccessity. Most of us have evolved. We want our animals as companions. Animals bring joy and love into your home.
Dogs sooth the soul. They are brought to nursing homes and elementary schools for that very reason. Dogs,(and not purebreds), are helping children learn to read. Since dogs do not judge, and they provide comfort, children can read to them without fear of being criticized.
I will always give to animal shelters and organizations. I will always get my animals from a shelter. Dogs are not there to jump through hoops for me. I am there to jump through hoops and whatever it takes to make them happy for the unconditional love they give us.
I’ve been using Redneck Bank for several months now and it is great. Customer service is super, the website is especially easy and they haven’t made any mistakes. 5.25% interest for making 10 little debit card purchases is certainly better than my other bank down the street that pays .25%. There are no “catches” with Redneck.
Evantage, Bank of the Wichitas, AmericaNet, Redneck Bank, All American Bank, and Southwest State Bank are all from the same bank “family.” You’ll notice they are all located in Oklahoma. They are all owned by the Huckabay family. The Tulsa World Newspaper just published an article about Redneck Bank. You can read it by going to the Tulsa World website and searching for Redneck Bank.
I plan to take advantage of this offer as my money market is making about 1/2%
As a liberal Democrat, I prefer to do business with liberals like myself.
I looked this family up on Newsmeat. Newsmeat is a Web site that lists political contributions for the past 30-years. If you donated $500 to X candidate in 1980, it will be listed.
Like many savvy businessmen nationwide, this Oklahoma family appears to have crossed both sides of the political isle and has given cash to both Democrats and Republicans. However, I would tend to guess their true political leanings are Republican? But I don’t know?
As a liberal, I would probably not do business with this family until I knew more about them.
I’m curious if other people try to do business with people like themselves? Many people do.
I do business with the company that will treat me the best and give me the best deal, their political leanings are irrelevant.
I like to be treated in a cordial manner, too, but it does bother me a bit if I know a certain company or corporation supports causes which I don’t.
Some people have been very vocal about a company’s investments say in a third world country, where children may be exploited or something like that.
I have to strongly disagree with the idea of only doing business with people who have the same political leanings as you, it just isn’t sound business. If I did that, because of the area I live in, I wouldn’t do any business at all.
I’m responding to k2000k’s comments. Apparently there isn’t a reply box following his post, so replying to my own post is the only alternative.
I disagree with your thoughts.
It’s very sad to live in an area where you don’t fit in. It’s not fun being an outsider.
If you don’t have the financial resources to move, you’re stuck. If you do have the financial resources, you should considering moving.
Benny Hinn doesn’t live in San Francisco. Gloria Steinem doesn’t live in Midland, Texas. They could possibly establish a few friendships in these cities, but overall they would get the cold shoulder. A very cold shoulder!
We can’t choose our relatives, but we can choose where we live.
Simply put, I’m not doing business with people with a different political agenda. If I have to accept less returns on my money, so be it.
Why should a corporation support causes in the first place? It seems the intent of a corporation is to make its stockholders money and to offer a product or service. Supporting pet causes is a waste of capital and frankly is meddling with liberty. Let the people push causes. This is not the business of corporations.
Bribery seems to be how business is conducted in most of the world, including America.
Big donors, including companies and rich individuals, don’t fork over $200,000 to candidate X without expecting something in return.
Causes are intertwined and connected to politics. And regulations that affect corporations are also connected to politics.
For decades, GM, Ford, and Chrysler fought against higher gas mileage regulations. Selling big SUVs and trucks was on their agenda. Selling fuel-effient cars was not so much on their agenda. They did themselves in.
It was a miracle the country worked as well as it did. Apparently the books were cooked. But everything came crashing down.
I guess the economy is doing a little better. A little. Hopefully interest rates will go up in the future.
Don –
Thanks for that info. I noticed that Evantage and AmericaNet have essentially identical websites, sometimes word-for-word in the text, and wondered about that. I usually take that sort of thing a red flag for some sort of scam or affiliate site-spam, but your post explains it benignly.
Seems like the only difference is Evantage gives you a Mastercard checkcard, while AmericaNet gives you a Visa checkcard.
Doug
Brian – Donate to an animal shelter (I do), but HSUS is NOT a Humane Society. They have an extreme political agenda of eliminating animals as pets.
I belong to a very active rescue organization that rescues dogs, gives them medical treatment, fosters them, finds them good homes for them and puts their money where their mouth is!
The HSUS agenda is the ELIMINATION of keeping animals as pets. If that’s not extremist, I don’t know what is. If EVERY dog/cat is sterilized, where will future generations get pets for companionship – cloning?
If you do some research into their policies & political agenda, you will learn something. They are NOT taking care of animals physically.
If you research it and you agree with them that is fine, I simply said people should not recommend a “charity” to donate unless they know what they are recommending. People see the words “Humane Society” and think of an animal shelter saving animals. That is NOT what HSUS does.
I know this is not the forum for this discussion, so if you think people should not be allowed to have pets, then donate your money & be proud of it.
All these banks now limit the top earnings rate to the first $10,000, not $25k as originally written back a month ago.
How are those who put in more than $10k now feeling?
Feeling …happy to have more than $10k in the bank?
Hah, kidding. That stinks.
Still, didn’t I just read about the online savings accounts (HSBC GMAC etc) lowering their rates to under 2%?
I haven’t signed up for one of these Rewards accounts yet, but it still seems like 5.25% on the first $10k and 2.25% on money beyond that is still one of the best deals going.
I had reason to contact Fidelity today on a 401k from an old employer, and their money market fund is currently paying a whopping .54%. That’s a 5 and a 4, with a decimal point in front of it.
Ah, never mind. I’ve been hearing this name on TV of some hotshot advisor… Bernie Madoff, I think. I wasn’t paying full attention. He sounds good, maybe I’ll just give everything to him to invest.
Doug
I was lucky to sell an income property before the real estate collapse. I was lucky there but not so lucky in some other financial stuff.
I’ve still got that money but I wonder how prudent it would be to have lots of these $25,000 reward checking accounts. If I had 25 of them, it would involve a lot of transactions. Do you think a person could keep up with the paperwork? I’m not working right now like a lot of people, so I do have the time.
How often do banks change the rates? And if they do change the rates on a regular basis, how much?
Luky you, indeed!
But…how about that direct monthly deposit as a condition for the high interest? Are you going to “spread” your monthly income in …25 accounts? Now that would be something to keep up with!
Hey Jim, thought I would let you know that the Huckabay family of banks (Bank of the Wichitas, Evantage Bank, Redneck Bank, etc.) have changed their max balance to earn high interest rates of 5.25% APY, from $25,000 to $10,000. I was just comparing the banks I mentioned to open an account when I noticed. I think it just happened today or very recently because I thought I remembered it as $25,000 yesterday. In any case, you might want to verify for yourself and update accordingly. Love the site btw, keep up the great work.
I wonder if the larger banks are making fraudulent accounts up into your banking system
because I watch my account dailey and all of sudden I started getting small amounts pulled out without a debit number,I really dont think it’s the large banks but maybe the people inside the banking system?
I’m a self-described “rate chaser”. I started with ING, then moved to Zions Bank’s Internet Money Market account. Both of these I found on bankrate.com, and had no debit transaction nor direct deposit/ACH requirements.
Now, I have moved the majority of my liquid assets to Texans Credit Union (texanscu.org). 4.25 APY, min 15 debit transactions + DirectDeposit or ACH. I think their minimum balance is $25. They “cap” the deal at $25,000.
There are no “gotchas”. The requirements are quite simple to meet for most people, and right now, 4-5% GUARANTEED + FDIC/NCUA insured – something to think about.
There’s another bank here in Texas offernt 5.02% APY: grandrewards.net
When I checked, their cap was $25k, and only required 12 debit transactions + DD/ACH.
The only potential downside is that they can lower the rate at anytime with no notice. This is what led to me leaving ING then subsequently Zions Bank.
If my Credit Union does it…I’ll move on to the next institution offering high interest.
That Grandrewards looks interesting Barry, thanks for posting that. Just looked at their site, and they are different from AmericaNetBank in 3 ways I can see;
1. They cap ATM fee refunds at $25 / month, AmericaNet does not. This is not an issue for me, just pointing it out.
2. Their limit on the high interest is $25k – nice. AmericaNet was $25k, but pulled the switcheroo to $10k before I was even done setting up my account!
3. GrandRewards says you can have multiple accounts, no limit as long as you meet the requirements. Nice. AmericaNetBank caps you at 2 checking accounts and 1 savings account. Boo.
Texans Credit Union has already lowered the rate to 3.75%, which is still pretty good in comparison to savings and checking. There is also a $25 fee join the credit union to participate in there high rate checking. As a former employee, I know the product isn’t making them much money. So, the rate may decrease again. I have recently moved my saving (which is all I kept in the HR Checking Acct) to a higher yeilding financial. It sucks the bank is in another state. Yet, ut keeps me from making uneccessary withdrawals.
For those who’ve asked where I moved to. It’s Grand Bank of Texas there are (3) locations in the DFW. Their rate is 4.52% (for 1st 25k and 1.01 for anything over) with 12 transaction and direct deposit OR (1) auto debit transaction. They also reimburse up $25 in ATM fees. I also considered Incommon Bank (in Mexia) who had a 5.01% rate, but it’s 288 miles away.
AmericaNetBank (and their clones I assume) just lowered their rates. Got the email from them directly last night.
Rewards Checking is now down to 4% from 5.25%
Money Market Savings account is down to 2% from 3.1%
The annoying bit is that I haven’t even finished completely moving over to my new accounts there. In the time it took me to process myself into their system (after reading this article), it went from 5.25% capped at $25k, down to 5.25% capped at $10k, and now again down to 4% capped at $10k.
Still, I tell myself that 4% is a lot better than the 0.0% BB&T is paying.
So, there ya go! the changing APR/APY is *THE* gotcha with the Rewards checking stuff.
But truthfully, until I feel better about equities again, I will continue to “rate chase”.
I have reduced the pain of doing so by paying practically everything I can via my Fidelity Visa account, which pays 1.5% on all purchases in cash. I also have a Discover which pays up to 5% cash back. those and my mortgage are the only bills I pay from checking anyway. So, when I pull the trigger and move to the institution now paying the higher rate…i go to 3 websites, spend approximately 30 minutes entering the new routing/account numbers and Voila!
Note: you WILL lose a couple of days of interest in the interim while your money transfers from one bank to the other. Just to make sure I put that out there in case someone thought I was oblivious to that…
All these are going to 4% May 5th except New England which is 3.65%
Could you please explain what you mean by all these are going to 4% except New England?
I just opened a checking account with First New England Credit Union. They have great rates, and I like the fact that they are small and not run by a huge company. Somehow, I feel better and safer now that I have changed from my bank.
Thank you
I would like to know how everyone is doing with their Reward Checking.
My 5 year CD is maturing Sept 1. I may go to the high yield checking.
The gotchas that I can see, might be having the money too easily available for me, might be a temptation for spending.
Also, from what I can see, you must go to the individual banks to open the accounts, at least most I’ve checked into. The ones I’m interested in are in Kansas or Dallas/Ft Worth. Both which are eight hours drive from me. Is it worth it, I wonder. If the rates go down, then I am busy driving to other banks, all of which costs money for gas and lodging.
I opened an AmericaNet Bank Interest Checking Bank Account in April and have decided to close it. I am not a dedicated rate-chaser and do not have much savings yet. I don’t like having to worry about making the 10 purchases and I don’t like to make 10 small charges at the gas pump (or something similar to that) just so I can try to milk some change out of it. I would try to make regular purchases but then I would get into the trap of spending more than I needed to. I wanted to save money and earn a high interest at the same time, like everyone else but I don’t think this option is working out for me. I would rather save my money the old fashion way.
I opened my account online and have been doing everything with it online and I live in California, AmericaNet Bank is in Oklahoma.
Ocean Communities FCU in Maine offers a 5.01% rewards checking account.
Hi Jim
Thanks for this site.
Just to keep us up to date, the three listed first at 5.25% now are offering only 4 %. That is about the highest any of the banks are now offering. My bank, Coulee Bank of Wisconsin, offers4.04% down from 6% some months ago.