With all the news of Bank of America's new debit card fee, many people have decided to switch to credit unions and community banks. Those looking for a community bank or credit union should consider a reward checking account. The vast majority of reward checking accounts are free checking accounts that give customers an option to recieve a high interest rate and refunds of ATM fees. These extra perks typically have monthly requirements which always include debit card usage. You can see my overview of reward checking in my post 10 Common Traits of High-Yield Reward Checking Accounts, and you can see what's available in your state in our reward checking table. This table can also be used to view accounts that are nationally available. To learn how, refer to our rate table guide.
It's important to note that the vast majority of reward checking accounts are only offered by community banks and credit unions. In addition for those wanting to leave their megabank, this is important due to the new debit card regulation. In the regulation, financial institutions under $10 billion in assets are exempt from the debit card interchange fee cap. That's important for reward checking accounts since they depend on debit card usage.
Reward checking accounts have now been around for over four years. Rates have gone down, but many of these accounts remain good deals. They're not only good deals for those who just want a free checking account with free ATMs, but they have also been good deals for those who want high interest rates. Many of these reward checking accounts still have yields significantly higher than the best internet savings accounts.
In addition to falling rates, reward checking accounts have also cut their balance caps. Most all reward checking accounts cap the high interest rate to some balance. The portion of the balance above this cap receives a much lower interest rate. A cap of $25,000 is the most common cap. However, many banks have been cutting this to $15K and $10K.
Another unfortunate change we have seen in reward checking accounts is reduced availability. Many banks launched their reward checking accounts with an online application available to people in any state. Most of these received too much demand, so the banks reduced their availability. Some reduced availability to just their state or to their small market area.
I thought it would be useful to list some of the top reward checking accounts with online applications that are available to people in one or more states. So even if you don't have a branch in your city, you can apply for these accounts if you're a resident of an eligible state. Most still have rates that are higher than what's available nationwide.
Rates, balance caps and availability as of 10/20/2011
- Southern Bank's Kasasa Cash - 5.01% APY up to $15K. Available in AR & MO. Online application. My October 2008 account review
- Communications Federal Credit Union's Free Performance Checking - 4.00% APY up to $30K. Available in OK & KS. Online application. My May 2008 account review
- First Arkansas Bank & Trust's Kasasa Cash - 3.03% APY up to $25K. Available in AR. Online application. My December 2007 account review
- ViewPoint Bank's Absolute Checking - 3.00% APY up to $25K. Available in TX. Online application (see application review). My May 2008 account review
- Liberty Bank's High-Interest Checking - 2.50% APY up to $30K. Available in AR, KS, OK & MO. Online application. My August 2011 account review
Finding Other Reward Checking Accounts
To find the best reward checking accounts in your area or that are available nationwide, please refer to our reward checking account table. Use the "Filter Accounts" button on top of the table to select either nationwide accounts and/or your state. Also, you can use this button to select the investment amount. This allows you to compare accounts with different rate tiers. For more details about how to use the rate tables, please refer to our rate table guide.