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Banks' Reward Checking Costs: Interest Vs ATM Fee Refunds

Saturday, November 17, 2012 - 9:33 AM
This Kasasa blog post mentioned a couple of interesting stats about Kasasa accounts. These are essentially high-yield reward checking accounts, but they also include checking accounts that have rewards other than high rates such as Amazon and iTunes refunds. According to the post, Kasasa accounts over the last 3 years have paid out $60 million in rewards and $5 million in ATM fee refunds. So the rewards (most of which is probably interest) is costing the banks 12x more than the ATM fee refunds.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Saturday, November 17, 2012 - 9:43 AM
To this date, I have no idea how banks/credit unions make money out of RCAs (debit card transaction fees certainly do not cover the paid interest/ATM fees/etc.). 

Thus it seems to be the combination of debit card transaction fees, counting on most not meeting requirements, and wider customer base; that makes RCAs appealing to them.
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427