Update 10/13/07: The 1-year guarantee intro rate is now 4.00% APY.
Capital One Bank is offering a special 5% APY free checking account. A reader mentioned seeing this advertised on TV. At first I thought it might be their 5% money market account since I couldn't find a 5% free checking listed at their website. I called, and they confirmed that it's a special checking account promotion that they're testing out in Austin, Texas. They may expand it to other cities at a later time.
[Update 4/20/07: A reader provided a link to this special at HighInterestFreeChecking.com. Most of the info that I had originally mentioned seems accurate. However, in addition to Austin, it's also available to those in San Antonio. Another nice perk is that Capital One will automatically reimburse any fee assessed at any ATM within 5 business days.]
According to the banking rep, the 5% APY is guaranteed for 1 year. After that, it's scheduled to drop to 3%. The account requires an initial deposit of $50. There are no minimums or monthly fees. The 5% is good on balances up to $250K. Online bill pay is free. They won't charge you for using other banks' ATMs and they will reimburse you on charges by other banks. The first book of checks are free. According to the banking rep, they don't do a hard credit pull, just a ChexSystem verification. For more info on this special, you can call Capital One's toll-free number at 1-888-855-2265.
Capital One Bank has branches in Texas and Louisiana. In December, Capital One completed the merger of New York-based North Fork Bank. So this special checking promotion may be in other cities later this year. Capital One also provides online banking at its Direct Banking website where they offer a 5% money market account. Costco members can get a 5.20% APY money market account and Costco Executive members can get a $50 sign-up bonus. For more info on these money market accounts please refer to my Costco/Capital One promotion post and my Capital One Money Market Accounts post.