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Update on the Top Nationwide High-Yield Reward Checking Accounts

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We lost our last 4.00% nationwide reward checking account (4% for balances up to $25K) yesterday with the rate cut at South Division Credit Union. The credit union slashed the rate from 4.01% to 2% APY for balances up to $25K. If you can't get higher rates at a local bank or credit union, you'll now have to settle for yields in the range of 3% to 3.50%.

It's a disappointment, but it could be worse. Considering most all internet savings accounts are paying under 1.50% APY, a 3% reward checking yield isn't too bad. Of course the yield isn't the only concern that reward checking customers have to worry about. Cuts in the balance that qualifies for the top rate is also a concern. The $10K cap is growing in popularity. A reader reported last month that Consumers Credit Union will be reducing its cap from $25K to $10K effective November 1st.

Nationwide 3%+ Reward Checking Accounts

Since there are no longer any nationwide 4% reward checking accounts left, we'll have to focus on the 3% group. I've counted 9 in our reward checking table that have a top yield of at least 3.00% for balances of at least $25K. Westfield Bank FSB remains on top with a 3.50% APY. Coulee Bank is second at 3.33% APY, and HCSB Bank is third with a 3.26% APY. The other six that remain all have yields around 3.00%. One of these six is Danversbank which had maintained a 4.01% APY since April 2008. Last Monday, the yield fell to 3.01% APY. So hopefully this 3.01% APY will hold for at least as long as the 4.01% held.

I did a quick check of these 9 banks, and all appear to still be available nationwide. In addition to rate and cap reductions, banks have reduced availability of their reward checking accounts. A recent example is BankTexas. It was offering its 3.25% reward checking account nationwide, but recently reduced availability to just Texas residents (it also cut the balance cap from $25K to $10K). Many banks have started out offering these nationwide, but after demand grows too high, they have fallen back to offering it only to their state or local market area. So please keep that in mind if you try to apply for these accounts.

Searching for the Best Rate in Your State

And don't forget if you're lucky there will be a local bank or credit union offering a reward checking account with yields much higher than 3.00%. You can search for your state in our reward checking table. Use the "Filter Accounts" button on top of the table to select your state. If you're curious to see the top yields regardless of the state, select "any". I just gave that a look, and there are still several 5-percent-plus reward checking accounts. The highest is 5.25% APY for balances up to $30K at Britton & Koontz Bank in Louisiana. This has held for more than a year.

  Tags: checking account

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Comments
5 comments.
Comment #1 by Anonymous posted on
Anonymous
I Live In Northern Louisiana
- Anonymous - Sunday, March 7, 2010 - 1:58 PM

I live in northern Louisiana. While in southern Louisiana on business, I took the time to go to B&K Bank. to open a reward checking account. There, I was rudely told that I was not eligible because I did not live with 40 miles of Baton Rouge. I had previously callled the bank and been on their web side. There was no mention of this residency requirement then. There is still no mention of this requirement on their web site. I think this shyster bank makes up the rules as they go.

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Comment #2 by CandyCane posted on
CandyCane
The point being made is that there may be rates higher in your local area than what is offered nationwide. I would doubt that 5.25 APY would last more than a few days if they opened it up to those outside the immediate area. It really makes you wonder though how some institutions in economically down areas are able to offer deals much higher than the best nationwide deals, yet the banks in prosperous areas offer zip for their local deals. When faltering banks offer high APY for their products to bring in more cash, the FDIC usually steps in and forces them to end those offerings.  Exampe....  Progress Bank of FL 4.04 APY earlier in the year that suddenly dropped to 0.85 APY in March.

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Comment #3 by Jeffry Pilcher | TheFinancialBrand.com (anonymous) posted on
Jeffry Pilcher | TheFinancialBrand.com
Candy, the FDIC doesn't step in to do anything to any bank unless that bank is struggling to meet minimum capital requirements. Banks with healthy capital ratios can pay any rate they want.

In this environment however, any bank paying more than 4% is probably not going to have a healthy cap ratio for very long.

2
Comment #4 by 51hh posted on
51hh
We analyze too much.  If one can gets a 5% deal, just take advantage of it while it lasts.

The fact is that there are still a few banks that think they can offer the 5% RCA with good profit.  That is that.

When it is gone, please do not analyze (to death) why they are gone, either,:D

That is life, folks; enjoy it whiel it lasts.

 

4
Comment #5 by Gaelicwench posted on
Gaelicwench
Banks and credit unions will find ways to make it profitable for them to keep their rates up; be it overdraft fees or......a fee for BILL PAY! I just discovered that my credit union charges such a fee, so that basically negates any interest I would be making each month. I emailed them to let them know I won't be using their bill pay service, but will still use my checking account for purchases and direct deposit. I'm not talking about the nickel and dime amounts times 12, either.

Admittingly, I was surprised to discover this, as all my other checking accounts - past and present (ING, HSBC, US Bank, USAA) have never charged me for this service. Guess there will always be at least one that will do so.....

C'est la vie!

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