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High Yield Reward Checking Gets More Publicity - Wall Street Journal Article

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Wall Street Journal came out with an article yesterday on reward checking accounts. With rates on CDs and savings account falling like a rock, the 6% yields offered by many reward checking accounts are attracting attention.

The article has a few new tidbits of info. It mentioned that Bancvue (the main provider of reward checking to financial institutions) has about 400 banks and credit unions with these accounts. This up from 300 since I last saw this stat, so Bancvue must be having success growing reward checking. I've only reported on about 100 reward checking accounts in the last year. So there are many more reward checking accounts to report.

The article repeated Bancvue's statistic that these accounts are on average twice as profitable to those financial institutions as a free checking account. It doesn't discuss if these reward checking accounts can maintain rates significantly higher than online savings account rates.

New Nationwide Reward Checking Accounts

The article mentioned 3 banks offering these reward checking accounts nationwide. The first one mentioned was State Bank of Toledo which I first reported on in June 2007. The second one is a reward checking that I just mentioned last week. It's at Southern Community Bank & Trust, and it offers a 6.00% APY for balances up to $25K. When I contacted the bank last week, I was told that they require a branch visit. I just sent the bank a message to see if the WSJ article made a mistake. The third bank was new to me. I just did a post on this. It's The Bank of Fayetteville. The yield is only 5.01% APY but the cap is $50K, so it's similar to The State Bank of Toledo which now has a 5.01% APY and $70K cap. I've sent a message to this bank to confirm that it's really available nationwide.

I have an updated list of reward checking accounts available nationwide in my weekly summary.

For more info on reward checking accounts, please refer to the following:

Thanks to the reader who sent me an email on this article.

  Tags: reward checking account

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Comments
10 Comments.
Comment #1 by Anonymous posted on
Anonymous
It's interesting how the majority of these Rewards Checking accounts have a cap (either $50K or $25K). I guess I got lucky that the one I signed up with, Southland Credit Union, has no cap. I hope that Southland CU won't decide in the future to institute a cap, which would mean I would have to transfer a lot of funds out. And I wonder why Southland CU can offer accounts with no cap and the others cannot? Any speculation? Seriously. I was told I can put any dollar amount in my 5.25% Rewards Checking Account I desire. And with two beneficiaries, I am insured by NCUA to $200K! (Note: I do reside in Orange County, CA.)

1
Comment #2 by Running For POTUS (anonymous) posted on
Running For POTUS
Yes. It's not worth doing it if you can only get the high rate on $50,000 total.

I put in $100,000 in my Rewards Checking, and I will add another $100,000 as soon as my CD matures in 7 weeks, assuming the conditions are the same.

Plus, my CU doesn't require an automatic debit or direct deposit, as most do. My CU requires at least one manual online bill pay or manual ACH transfer or deposit, of any amount. (Everyone has at least one bill they could pay using online bill pay. Or, at the very least, I can send an ACH transfer to my linked checking account at another bank. Even for just a dollar.)

I need to do 10 debit/check card transactions per month. (I can log into my account online and it tells me how many I have done so far for the month, to see if I am successful.) I will try doing it via PayPal, with small amounts, sending money to a friend or relative, telling PayPal to charge it to my Visa Check Card, to see if this actually works. It should. If it doesn't, maybe I will just do the iTunes songs.

1
Comment #3 by Anonymous posted on
Anonymous
Any way of finding a list of the banks Bancvue is affiliated with?

1
Comment #4 by Anonymous posted on
Anonymous
what about turbochecking at charter?

1
Comment #5 by Anonymous posted on
Anonymous
POTUS,
Don't be very ****y since
everyone is not so rich.
Even $25k is good enough for most people. 1% differential on $25000 is $250.
BTW, MCUU is still offering 5.26% reward checking if you qualify.

1
Comment #6 by Running for POTUS (anonymous) posted on
Running for POTUS
I apologize if I came off ****y.

I am very sorry.

You are right.

I really meant to express a passionate point rather than imply that I am rich (which I am not).

I get angry over the fact that most of these banks and credit unions are placing caps on these rewards checking accounts when they are asking for a lot of work and responsibility on the part of the customer, where the customer must do 10 to 12 debit transactions per month AND must do direct deposit or automatic debit, etc.

I personally feel that a cap of $25,000 makes these accounts far less attractive.

And since some banks can offer these accounts with no cap, why can't all the banks offer no cap?

People will respond that if a bank allowed $100K or more for these accounts, the bank might lose money. So, if true, the CU I am using will be losing money since they allow any amount, which will mean that they will have to eventually institute a cap, and then I will have to transfer my money out.

1
Comment #7 by Anonymous posted on
Anonymous
I am not the original poster to potus but I must remark:

It is so nice to see that there still are sincere people out there using the internet and know how to apologize when sometimes their comments may be taken the wrong way.

People like yourself really help to keep this site civil. Thank you

And thanks again to Banking Guy for this site and keeping us savers so well informed.

1
Comment #8 by Running for POTUS (anonymous) posted on
Running for POTUS
Thanks for your comment about my sincere apology.

I promise I have learned my lesson and will not make that mistake again.

I would also like to second your expression of appreciation to Banking Guy for this site.

1
Comment #9 by Anonymous posted on
Anonymous
Actually with the economy and the markets going so bad I don't know how the banks can offer a 6% returns while, after all these Fed's cuts.. the official rate for a bank account is 3.2%.
They may be only "fishing" new customers.. and after few months.. move to the standard APY earnings.

does anybody know if those banks account have some high closing fee?

Thanks,
Davide

1
Comment #10 by Banking Guy (anonymous) posted on
Banking Guy
The balance caps and the debit card usage requirements help the banks keep the rates higher. It's hard to say how much they help though. Many have been offering 6% for more than 8 months. This year should be a good test to see if they can keep the high rates.

Most all of these accounts have no minimum balance requirements and no monthly fees. If you don't meet the requirements, you just won't get the high yield and the ATM fee refunds. So you can always withdraw your money without having to close the account.

1