It has been about one year since Bank of Internet USA launched its Rewards Checking Account. I first reviewed the account on July 12, 2011. At that time I was disappointed by the low top yield of 1.25%. That yield has held for the last year, and it has become more competitive as rates at other banks have fallen. Unlike the typical reward checking account, this top rate applies to all balances. So that also makes it a better deal.
The downside of this Rewards Checking account is that it has monthly activity requirements to qualify for this top yield. With 3 money market accounts that also offer a 1.25% yield but without the activity requirements, it may be hard to justify this account. The main reason to choose this account would be if you are tired of rate chasing. There's no guarantee this rate will last, but with one year of history and based on its reward checking requirements, the chances are better.
You can see the monthly requirements at the bank's Rewards Checking rate page. One thing that makes it different than the typical reward checking account is that the requirements are not all or nothing. There are four requirements, and each time you meet one, you get a quarter of the top rate. So if you don't meet one requirement, the rate that you get for that month will be 75% of the highest rate. For the typical reward checking account, missing any of the requirements results in a rate that's close to zero.
In addition to the competitive rate, the Rewards Checking account has some nice features such as no monthly maintenance fees, unlimited ATM reimbursements and online deposits of paper checks. I have more details in my original Bank of Internet USA Rewards Checking review.
Bank of Internet USA just had its 12th anniversary. The bank was officially established on July 4, 2000. The bank is now called BofI Federal Bank. They have kept the name Bank of Internet USA, but deposit accounts held at Bank of Internet USA are FDIC insured through BofI Federal Bank.
BofI Federal Bank's financials have remained strong. Currently, it has an overall health score at DepositAccounts.com of 4 stars (out of 5) with a Texas Ratio of 9.52% (above average) based on March 2012 data. Please refer to our financial overview of BofI Federal Bank for more details. The bank has been a FDIC member since 2000 (FDIC Certificate # 35546).
How This Rewards Checking Account Compares
You can get higher reward checking rates, but those accounts have balance caps. Please refer to our reward checking table to see all of the best reward checking rates.
As I mentioned above, you can currently get 1.25% APY with 3 money market accounts that don't have the monthly reward checking requirements.
The first bank that's offering 1.25% APY is this same bank. It's their UFB Direct division. It launched a new money market account in May paying 1.15% APY, and in late June, it went up to 1.25%. The rate applies to balances up to $250K. When UFB Direct first launched last year with a 1.30% APY savings account, the rate lasted about 6 months before falling 50 basis points. It's likely we'll see a similar rate cut on this money market account before the year ends.
The other bank offering 1.25% is EverBank. However, this is just an intro promotional rate for its checking and money market account. It's guaranteed to last for the first 6 months from account opening. Then the rate will return the the standard ongoing rate. That's currently 0.76%. Another downside with this EverBank promotion is that the balances that qualify for this promo rate are capped ($100K for the checking and $50K for the money market account).
The third bank paying 1.25% APY is TIAA Direct. When this new internet bank launched in February, its online savings and money market accounts were paying 1.25% APY. That rate has held since that time. However, I think there's a good chance that this rate will fall before the end of the year.
The above rates are accurate as of 7/5/2012.
You can review the best money market rates using our money market account table.