High-Yield Reward Checking Account at First State Bank in TN - Local Only

Update 4/14/11: The rates and balance cap have fallen. Refer to the bottom for the rate history.

First State Bank is offering a high-yield reward checking account called FirstChecking + Interest. It offers the following rates and features if certain monthly requirements are met:

• 4.01% APY on balances up to $15,000
• 0.25% on portion of balance over $15,000
• 0.05% base rate if requirements are not met
• Unlimited nationwide ATM fee refunds

The monthly requirements include:

• 15 Visa check card purchases
• 1 direct deposit or ACH auto debit
• Receive e-statements

Additional features of the account regardless of the monthly requirements include:

• $25 minimum initial deposit
• No minimum balance requirement
• No monthly maintenance fee

There's an online application link at the bank's micro-website. However, the application states "We are only currently accepting Rewards Checking applications from the state of Tennessee."

Branches are located in many Tennessee cities some of which include Nashville, Lexington, Jackson, Union City and Knoxville.

The bank's ratings for safety and soundness are a little mixed: 3½ stars (good) at BauerFinancial and 2 stars (below peer group) at Bankrate.com. Both ratings are based on 9/30/09 financial data. The bank has been a FDIC member since 1934 (FDIC Certificate # 1479).

Thanks to the reader who emailed me news of this reward checking account.

4% Reward Checking Accounts

It's getting harder to find reward checking accounts with rates at or above 4%. Many popular ones have been cutting their rates, reducing balance caps and/or restricting availability. If you have a choice between a reward checking account that's only available in your area vs. one that is available nationwide, you may have better luck with the local one. Nationwide ones attract more rate chasers which can put a strain on these accounts.

Rate History:

• 10/01/10: 4.01% APY up to $15K (15 debit card purchases); 0.25% over; 0.05% base
• 02/01/10: 4.25% APY up to $25K (12 debit card purchases); 1.01% over; 0.15% base