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Bank of Internet USA1.25%-$150kRewards Checking
Accounts mentioned in this post. Rates as of August 28, 2014

The New Free Rewards Checking Account at Bank of Internet


Bank of Internet USA

This is the first time that I've seen a pure internet bank offering a high-yield reward checking account. Bank of Internet has just started listing the account on its website. It's a little different than the typical high-yield reward checking accounts, and some may dispute the use of the term "high-yield". The top rate is currently 1.25% APY which is low for reward checking, but this applies to all balances. Like the typical reward checking account, this rate requires certain monthly activities. Unlike most other reward checking accounts, it's not all or nothing. Meeting certain requirements qualify the account owner for an extra 0.3125% in the rate. Here's a summary of how to qualify for the full 1.25% APY:

  • +0.3125% for receiving direct deposits each month totaling $1,000 or more
  • +0.3125% for paying 2 bills each month through the free online banking
  • +0.3125% for using your Rewards Checking Debit Visa Card at least 1 time per month for normal everyday purchases
  • +0.3125% for using your Rewards Checking Debit Visa Card at least 6 or more times per month for normal everyday purchases

Like most reward checking accounts, there are ATM fee reimbursements. However, it doesn't depend on meeting monthly requirements. The bank automatically refunds fees charged by other banks at the end of your monthly statement period (excludes international ATM transactions).

Also like most reward checking accounts, this is a free checking account with no monthly maintenance fees and no minimum monthly balance.

How It Compares to Other Checking Accounts

In my opinion, the rate isn't high enough to make the required activity worthwhile. You can get rates close to 1.25% APY at internet checking accounts without the work. For example, Incredible Bank is offering 1.21% APY on its internet checking, Alliant Credit Union is offering 1.10% APY (with direct deposit) and ING Direct offers 1.15% APY ($100K minimum). Rates are accurate as of 7/12/2011.

Compared to other reward checking accounts, the rate is low. As I mentioned yesterday, you can get nationally available reward checking accounts with yields around 2.50%. However, this rate is only for balances up to $25K. The portion of the balance above $25K earns a much smaller rate. Reward checking accounts without a balance cap haven't held up well. One example is City National Bank which was the first bank in the nation to offer a reward checking account. The bank has always made this account available nationwide without a balance cap, and this appears to have seriously affected the rate. The top rate is now only 0.45%.

Even though the rate isn't that great, it's nice to see a new rewards checking account especially with the new debit card regulation that will be taking effect in October. Bank of Internet has under $10 billion in assets so it won't be directly affected by the debit card fee caps that will take effect in October. However, there have still been concerns that small banks will be affected.

Bank of Internet Overview

Bank of Internet has long offered competitive CD rates. I recently took a look at these and the bank's savings accounts in my Bank of Internet CD review.

Bank of Internet just had its 11th anniversary. It's one of the oldest pure internet banks. During that time, its financials have remained strong. Currently, it has an overall health score at of 4 stars (out of 5) with a Texas Ratio of 12.25% (above average) based on March 2011 data. The bank has been a FDIC member since 2000 (FDIC Certificate # 35546).

  Tags: Bank of Internet USA, checking account

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Comment #1 by 51hh posted on
Yeah, right... tedious enough so that most customers will earn near-zero interest.  Nice going.

Comment #2 by Anonymous posted on
They are still mailing checks to pay your bills and takes up to 10 business days to clear the payment plus all that work for just 1.25%, no thanks, I will not even consider such deal.

Comment #4 by Anonymous posted on
No, you do not need to mail checks nor does it take 10 days to post- Check out their MyDeposit which allows you to depost checks instantly from the comforts of your home or office using a scanner.  Also, no other bank is offering DOUBLE Rewards-  free checking account with unlimited ATM withdrawals.  Bank of Internet actually rewards you interest based on your behavior and CASH BACK based on your spending, it certainly doesn’t get any better than that!

Comment #5 by Anonymous posted on
It’s always the detail.  For example:

Incredible Bank does not have:

·         Check books

·         Overdraft Line of Credit

·         Remote Deposit Capture

·         FinanceWorks or the like

·         Purchase Rewards or the like; and

·         Minimum balance to open $1,000

·         1.21% on first $250k; after that 0.80%


ING does not have:

·         Check books

·         Remote Deposit Capture

·         Purchase Rewards or the like;

·         Sweep facility; and

·         Limit of 1 checking account per customer

·         1.15% only paid on >=$100k

The point being, Rewards Checking not only stacks up but exceeds when it comes to features.

Comment #6 by Anonymous posted on
To #5,

For the difference of 0.04%, you want me to do all that work month after month, no thanks.

Comment #7 by Rebecca (anonymous) posted on
Ok, #4 clearly works for the bank. 

"Also, no other bank is offering DOUBLE Rewards-  free checking account with unlimited ATM withdrawals."

All the RCAs I've ever seen on this site are free and almost all of them allow unlimited ATM reimbursements.

Comment #8 by RJM posted on
Yeah, not worth fooling with.

My local credit union, where I have a 2% rewards checking and a 1.25% money market told me today that I could have TWO reward checking accounts. So I guess I will go ahead & do it. I have 2 cards now and I usually knock out my 24 transactions by mid month.

Difference between 2% and 1.25% on $25k is $15.63 per month.

Better rates out there but how many would reject me for having too many bank accounts ?