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Charter Bank Slashes the Rate on its Nationwide Reward Checking Account


Charter Bank
Charter Bank slashed the top rate of its reward checking account from 4.01% to 1.25% APY. Charter Bank had a 2-year history of offering a nationwide reward checking account with very competitive rates. With this major change, it brings up the question of whether reward checking can provide rates higher than online savings accounts over the long term.

Charter Bank made two other changes attempting to make up for the new low rate. The maximum balance that qualifies for this top rate was increased from $25K to $50K. Also, they now only require one debit card purchase per month rather than 13. For those using this reward checking account as an alternative to an online savings account, these two improvements are little help since you can still easily find higher savings account rates at many internet banks.

It's interesting to see them slash the monthly debit card requirement to only one. This seems like they're admitting that they're not making much from the debit card usage. I recently discussed the impact of debit card purchases on reward checking accounts in this post on City National Bank.

There has also been another major change to a nationwide reward checking account. I received confirmation on Friday that Libertad Bank is no longer accepting new applications for its nationwide reward checking account that's paying 3.50% APY. The rates remain the same for now for existing customers (see post).

We're seeing a lot of changes now with reward checking accounts. I just reported on Friday about the rate and balance cap cuts at First Arkansas Bank & Trust (see post).

Below is part of the email that Charter Bank customers received yesterday (Thanks to the reader who forwarded this to me):

As the financial markets continue to fluctuate, we are working hard to ensure that MORE of your money earns higher-than-average rates. To accomplish this, several changes to your TurboChecking Account will go into effect today, November 2, 2009.

While the maximum rate that Turbo will pay will be reduced to 1.25% APY, The maximum balance on which you can earn the maximum will DOUBLE to $50,000, and You will only need to post ONE debit card transaction per cycle.

This makes it easier than ever for you to earn the maximum rate and enjoy the other unique benefits of your TurboChecking account!

STILL No ATM Fees Nationwide
STILL Overdraft Privilege
STILL No cost Online Bill Pay

Beginning November 2nd, the following rates will be paid when you meet the monthly requirements

* Earn 1.25% Annual Percentage Yield (rate of 1.243%) on your balances of $0 to $50,000, 1.01% Annual Percentage Yield (rate of 1.01%) on all amounts above $50,000, and 0.25% Annual Percentage Yield (rate of .25.%) on all balances if the requirements are not met each statement cycle.

We've been a rewards checking leader since we began TurboChecking in October, 2007. Be assured that as the marketplace allows, we will pay you the highest rate that we can.

We believe you will find that TurboChecking still offers a good return on your deposits.

To find reward checking accounts or to learn more about these accounts, please refer to my High Yield Checking website. Note, I'm in the process of updating the tables with the recent rate cuts and changes from many banks.

  Tags: Charter Bank

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Comment #1 by Anonymous posted on
This was my first rewards checking account. It's been a good couple year run...Sorry to see it go ;o(

Comment #2 by Anonymous posted on
I get more at Ally and I don't have to do anything!

Comment #3 by Anonymous posted on
This week was a real bad double whammy.... First First Arkansas cuts their rewards rate by a full 1% to 3.5%. And then Charter cuts their rewards rate to nothing.

Both were good runs while they lasted. Was busy today making new arrangements with other higher yielding banks for my rewards accounts deposits...

It certainly hacks me off a bit that in both cases, Charter and FABAT, they announced the rate changes to take effect immediately, giving their customers not even a month's grace period to make alternate arrangements.

OK, that just means I'll be transferring my FUNDS out of those institutions even FASTER....

Comment #4 by Anonymous posted on
What's even worse is that Provident NJ dropped their reward checking rate, and DIDN'T EVEN announce it.
Tried to quietly slip it by.

Comment #5 by Anonymous posted on
I have accounts in both charter and FAB&T. It is not a good week for me. Yes, I agree that both Charter and FAB&T should have given us at least one month before the new rates are effective. However, FAB&T's 3.5% is not so bad while Charter cut it 1.2%. Can its TurboChecking still be called rewarding checking???

Comment #6 by Anonymous posted on
Just logged into Ally to transfer out of Charter. Will close "Turbo" Checking once balance is down to zero. Sad to see it go since it was my first Reward Checking account.

There will always be some other bank that needs deposits to fix their balance sheet and will open such accounts. Unless FDIC gets involved in this like they have with Ally!

Comment #7 by kow626 (anonymous) posted on
some of you should be thankful of this as a friend of mine has charter and i know what those horrid debit cards look like. lol. you don't have to be embarrassed to make purchases anymore. :)

i found out about a chexsystems hit when i originally tried to open a turbo checking acct. since they refused me, i had to convince tristone community bank that i wasn't a risky customer and i was lucky that they accepted me. they're now first community bank and their backbone checking is holding strong over 4% for now. hope they dont plan on following suit with charter as they both came around at about the same time years ago.

Comment #8 by Anonymous posted on
I think, the big banks are pushing FDIC to crack down on the reward checking accounts out of pure jealousy and in need of more cheap money to fill their coffers.

Comment #9 by Anonymous posted on
Well, big drop in requied debit card use. That's good. Big drop in reward checking account rate. That's not so good. The rate drop eclipses the drop in required debit card transactions, so why even call it a reward checking? You need to rename it to "low penalty checking".

Comment #10 by Anonymous posted on
Rate is now 0.25% no matter what.

Comment #11 by Anonymous posted on
Looks like we have another failed bank. I just received paperwork from Charter alerting account holders that the Office of Thrift Supervision has taken over the bank. Looks like the Turbo Checking account is no longer even structured as a rewards checking account, and the rate is listed as 0.25% APY.

Comment #12 by Anonymous posted on
The rate is now 5.01%