Update 01/02/09: The yield has fallen to 4.10% APY. Refer to the bottom of the post for the rate history.
Peoples State Bank has started a reward checking that pays 4.10% APY for balances under $20K and refunds ATM fees when the typical monthly reward checking requirements are met: 1) 10 debit card transactions, 2) one direct deposit or ACH auto debit, and 3) receive electronic statements. If these are not met, the rate falls to 0.25%. A minimum deposit of $50 is required to open the account, but there are no minimum balance requirements or monthly fees regardless of meeting the requirements.
It looks like you have to visit a branch to open this account. Branches are located in the Illinois cities of Sumner, Newton and St. Francisville. The bank has been FDIC insured since 1934 (FDIC Certificate # 11722).
For other reward checking accounts in other parts of the country (and some without balance caps), please see my reward checking account page and my best checking account post.
01/02/09: 4.10% APY
07/12/07: 6.10% APY (initial post)