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High Interest Reward Checking Accounts

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Stacks of Bound $100 BillsLast 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):

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The rates in this post are out of date.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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63 Responses to “High Interest Reward Checking Accounts”

  1. Cordell Bowman says:

    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.

  2. Robert says:

    Founders Bank in Sugar Land Texas offers a checking account paying 5.01% on first 10,000 and 2.25 above 10,000. Requires 10 debit purchases and 1 automatic payment. Service has been great. Why put your money in a MM or CD when these rates are available.

  3. Chris says:

    Love mine. Still earning around 4%APY and no atm fees anywhere!

  4. Daniel says:

    I fear I may have posted this commentary and inquiry under the wrong thread so I will post it here as well :)

    To meet the minimum debit card usage, I have turned to the gas pump. Use the debit card to pump a gallon, then turn off the pump and repeat. I will get my 5 transactions in one trip for something I definitely need anyway. The station attendant must thing I am crazy.

    Do any of these accounts allow the initial opening deposit to be made via credit card w/o fee to aid with reward tier busting?

  5. James says:

    Hi Jim,

    I have had an account with Lake Michigan Credit Union for almost two years now. They had 5% APY on all funds up to 15K. Now it is 4%. Four conditions exist: Direct Deposit, 4 logins a month, E-Newsletter, 10 debit card uses. My wife and I have it and it is GREAT. We usually have the 15K in there so we get approx. $55 a month, for doing practically NOTHING. The bank is out of county, so to qualify, we had to make a one time $5 donation and we were in.

    I recommend it to people on a daily basis.

    You may recall in fact that I emailed you about a year ago asking how this bank could offer such a thing. Your response about the Debit surcharges but my mind at ease. Thanks!!

    James

  6. James says:

    Just went to Evantage’s website. They are down to 4%

  7. Christine says:

    My bank’s (S & T Bank)reward program is a little different. Instead of paying interest it pays 10 cents for every check card transaction (not debit)and refunds any ATM fees charged by other banks. The catch is that you must maintain a 1,000 minimum balance or pay a 10 dollar monthly fee. When I first opened the account I paid the fee the first few months but was reimbursed for half by the 10 cent rewards. Then I realized my savings account (HSBC direct) is paying far less than the monthly fee so I parked 1000 in my checking account and now make about 5 a month on the 10 cent rewards. The bonus is that if I need cash in an emergency I don’t have to pay a fee for using another bank’s ATM.

  8. SavingEverything says:

    Christine, your bank seems not worth it– 50 transactions to get $5 for each month!?! Plus, in order for you to make 3% on your $1000, you need to make at least 25 debit transactions per month!?! That’s a bit more hassle compared to other checking reward banks that also have ATM fee refunds. I’d consider another bank.
    For these rewards checking, based on KEN’s survey a whileago, most of his readers spend $100 or less on their monthly 10-12 debit transactions. That means, with 0.25per transaction and ~2% surcharge that the banks charge the merchant, they profit only $4.5-5.50 on $100 in 10-12 transactions. Not much when they’re paying currently 3.5% (average rate) on 25k, and refunding other bank’s ATM fees upto $20.

  9. Pilm says:

    This is for anyone using or considering AmericaNet Bank, be very very careful! I put $5000 in an AmericaNet Bank savings account because they offered a 2% rate. Every quarter I’d go online and check my account. Well, come to find, after my one year anniversary with AmericaNet Bank they began to charge a $10/month fee. AmericaNet Bank did not provide any notice whatsoever when they started helping themselves to my money. It wasn’t until I logged on recently for my quarterly account review I found $20 missing. After invesitigation I found that after one year, if you don’t add more money, your account is considered dormant, and AmericaNet Bank starts penalizing your account $10/month every month until you add more money. Almost seems like extortion to me! I’ve used at least a dozen online Savings accounts and have never had money drained from my account like AmericaNet Bank is doing! No bank has ever penalized me for leaving my money in their account! But AmericaNet Bank does! Beware, beware, beware! AmericaNet Bank is a sham and ripoff.

  10. Quick update:
    Evantage has lowered their rates to 3.75%

    It’s still pretty nice, but not as great as it used to be.


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