Dedicated to Deposits: Deals, Data, and Discussion
About Ken Tumin About Ken Tumin - Founder and Editor

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

Featured Savings Rates

Popular Posts

Featured Accounts

Another Case of Customers Kicked Out of Their Reward Checking Accounts


Southern Bank

When banks get too much demand for their reward checking accounts, they often limit new accounts to their local market area. However, they rarely close accounts to out-of-state customers. Unfortunately, there was another case of this. A reader reported that he received a letter from Southern Bank informing him that his Kasasa Cash account will be closed at the start of April. He called the bank and spoke with the second in command at the bank and was told that they were reducing the client list to locals and closing the accounts of people outside their footprint. The reader was angered not only by the closure but by the curt and vague letter that excluded a signature and a rationale for the closure.

The reader had opened Southern Bank's reward checking account when the account was available nationwide (when it was Southern Missouri Bank). In early 2009 the bank restricted the account to only residents of MO, AR, TN, KY and IL. Later in 2009, it restricted the account to only residents of MO and AR, the two states where they have branches.

Southern Bank's reward checking account has a history of very competitive rates. It started in 2008 with a 6.01% APY for balances up to $25K. The rates went down, but the yield was still 5.01% for up to $25K until April 2011. It's now 4.01% APY for balances up to $15K.

There have been a few banks that have not only restricted new accounts, but have also forced out existing out-of-state customers. Liberty National Bank in Oklahoma did this last year. They handled it better than Southern Bank. Instead of just closing accounts, they transitioned existing out-of-state reward checking account owners to free checking accounts.

Fortunately, this kind of action by banks has been rare. Most banks have only restricted new customers. Existing customers have been allowed to keep their reward checking accounts.

Instead of targeting out-of-state customers, it has been more common for banks to target customers who aren't using the accounts as "primary" checking accounts. The last bank to do this was Jeff Davis Bank in November.

All of these actions indicate that reward checking accounts may not be as profitable to the banks as they had originally anticipated. A lot of the profitability depends on high debit card usage and low average balances. One credit union which sent me stats said that 12,000 of its members with reward checking accounts spent on average $960 per month with their debit cards and maintained an average balance of $8,400. I would guess most of us savers spend less than this and maintain larger balances. That's why banks need to attract lots of "Average Joes" who aren't savers. When the banks offer accounts online from any state, they probably attract more savers than "Average Joes".

Finding Reward Checking Accounts

There are still several reward checking accounts that are nationally available, but as I described above, you'll probably have better luck if you find one that's local. You can use our reward checking rate table to find both nationwide and local accounts. Refer to this post for details on how to use the rate tables, and refer to my reward checking overview to learn about these accounts.

  Tags: Southern Bank, checking account

Related Posts

Comment #1 by 51hh posted on
Thanks.  This was the very last 5% club member.

It is also worth noting that it was among the first few banks that advocate "usage as a primary checking account."

Comment #2 by Anonymous posted on
Ken, Thanks for the review of Southern Bank's policies with regard to out-of-state customers.  I have two questions for you specifically, Ken.   Why would you list First Security and Trust Bank in Iowa as having a reward checking account available nationwide when this same bank did the same thing as Southern Bank did recently to its out-of state customers just 2 years ago.  Secondly, why do you list Jeff Davis Bank as having a reward checking account that is available nationwide when the Bank's online application states specifically that it is only available to residents of 4 states?

Comment #3 by KenBDG posted on
Anonymous #2, Thanks for noting Security and Trust Bank's history. I had overlooked that. I added a note at the top of my last blog post. About Jeff Davis Bank, that was an error. It's no longer listed as nationally available in the tables (only available in east TX and LA). Thanks for catching that.

Comment #4 by rj (anonymous) posted on
really is a no-brainer for banks to discard unprofitable customers.

Im surprised I have not been kicked out of mine. 


If I worked at a bank, I would go through and kick out folks like me to increase profits.

Its not like I am going to become profitable sometime in the future.