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Kasasa - The New Name of Reward Checking and Savings Accounts

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FAB&T
When I first came across Kasasa.com, it appeared to be a new competitor to BancVue's reward checking. However, from the Kasasa About Page I learned that it was just new offerings from BancVue and FIRST ROI. Here's how BancVue's CEO describes Kasasa at their Kasasa blog:
By partnering with Kasasa, community banks and credit unions gain a level of product development awesomitude that until now was only afforded to the big banks.

But unlike the big guys (you know the ones that caused a worldwide economic crisis and might have cost someone you know their job), Kasasa doesn't use it's R&D skills to figure out how to squeeze more and more and more fees out of you. Instead, we try to figure out how to give more and more and more back to you.

BancVue and FIRST ROI already have CheckingFinder, so I wasn't sure of the purpose behind Kasasa.com. But after reviewing their website and blog, it appears they're trying to expand their reach. Some examples of this include:
  • Using Blogger and Twitter to appeal to the younger generation
  • Kasasa Tunes that rewards customers with free iTunes downloads rather than high interest
  • Kasasa Giving that donates interest that your account earns
Even though you may not be interested in the above features, they may help savers who are mainly concerned with earning a high interest rate. If the banks can attract a wider segment of society who have smaller savings and spend more, that should help these accounts remain profitable for the banks. And that should help the banks maintain the high rates. We need more reward checking account customers with balances under $5,000 and who make $1,000/month in debit card purchases. Those people are going to be much more profitable for the banks than those with $25,000 balances who spend just $20/month in debit card purchases.

New Savings Accounts

There is one new Kasasa product that should appeal to savers. It's called Kasasa Saver. It's designed as a companion savings account to the checking, Kasasa Cash. It should appeal to those who have balances that go over the balance caps of the checking accounts. Let's say you have $100,000 and the checking has a cap of $25,000. You can earn the high interest on the $25,000 in the checking, and $75,000 can be in the savings account. The savings account typically has lower rates than the checking, but they're competitive with the national online savings accounts. You'll still have to meet the checking requirements to earn the high rates on the savings accounts. So if you forget, you'll lose out on a month of interest on a lot of money.

There are currently not too many Kasasa providers and fewer that offer Kasasa Saver. Also, not all offer their products nationwide. One that offers all Kasasa products nationwide is a bank that has long offered the reward checking account, First Arkansas Bank & Trust (FAB&T). I first reported on this bank in December 2007 when it was offering a nationwide 6.06% reward checking account without a balance cap. They became too popular, and they slashed their rate to 4.44% in February 2008. In addition, they reduced the balance cap to $50K. That was a disappointment, but that was probably a good move that allowed them to maintain that rate and balance cap. After more than a year, they continue to offer the same 4.44% APY for balances up to $50K which makes them one of the best deals on my nationwide reward checking list.

Here are the current rates at FAB&T as of 5/13/09:

For the checking account, Kasasa Cash:
  • 4.44% APY up to $50K
  • 1.76% APY over $50K
  • 0.05% if requirements are not met
For the savings account, Kasasa Saver:
  • 2.04% APY on all balances
  • 0.05% if Kasasa Cash requirements are not met
It's interesting to note that there's not much difference between 1.76% that's earned in Kasasa Cash for balances above $50K vs. 2.04% in the Kasasa Saver. Why not just give 2.04% in the Kasasa Cash rather than adding the complication of another account? I guess one advantage is that it's a little more secure. You don't have all of your balance in a checking account that can be accessed with a debit card. In that case, perhaps they should have the savings account have the highest rate. You would only have to keep enough in the checking account to cover the debit card purchases. However, that could reduce how much people may spend with their debit cards so that may be a negative from the bank's point of view.

Other banks have higher rates on their Kasasa Saver accounts. One example is Bank of Little Rock which offers a 3.01% APY on all savings account balance if the Kasasa Cash requirements are met. The Kasasa Cash account has a top rate of 4.51% APY for balances up to $25K. Over $25K, the rate drops to 0.60%. In this case, the savings account makes more sense than at FAB&T. I have more details in my Bank of Little Rock review. Note, unlike FAB&T, the Kasasa online application for Bank of Little Rock appears to be limited to Arkansas zip codes.

Other Reward Checking Accounts

To find reward checking accounts in other areas of the nation or to learn more about these accounts, please refer to my High Yield Checking website.

  Tags: FAB&T, checking account, savings account

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