High-Yield Reward Checking Account at City National Bank in Texas - Nationally Available
Update 12/15/10: The top rate has fallen to 0.75% APY. Refer to the bottom of the post for the rate history.
City National Bank is offering a reward checking account with a 0.75% APY on all balances and with refunds of all ATM fees nationwide if the following monthly requirements are met:
- 10 debit card purchases
- monthly direct deposit of payroll or government benefit
- Receive e-statements and maintain a valid email address
If these are not met, the rate falls to 0.05% for that month. Additional features of the account regardless of the monthly requirements include:
- $100 minimum initial deposit
- No minimum balance requirement
- No monthly service charge
- Online bill pay for free with direct deposit
There's an online application located at the reward checking page. Using the bank's online chat system, I was told that people from any state can open the account using this online application. The CSR also said that the application process only performs a soft credit inquiry so there should be no ding to your credit score. The bank has an ACH bank-to-bank transfer service, but it has some limitations. The biggest one is that by default there's a $2,500 transfer limit. The CSR said that higher limits are negotiable upon request. So you would probably be better off initiating transfers from another bank. They don't block external ACH transfers. They typically don't place holds on ACH deposits, but large deposits may trigger a 3-7 day hold.
The CSR didn't know how long the rate would last. The current rate is below average for reward checking accounts, however, the lack of a balance cap helps make up for this. So there could be a lot of demand for this account which could put pressure on the rate. This account has been around for a long time. In fact, City National Bank was the first bank to offer reward checking. From this reward checking news article:
The high-yield checking account was born in 1997 out of City National Bank, a small community bank in Taylor, Texas. President Andrew Littlejohn wanted a product that would lessen the impact of the inevitable tide of national banks expanding out of Austin into his small community.
With the goal of customer retention, BancVue built software that would allow City National customers to use electronic banking while earning a higher percentage rate on their checking accounts.
I mentioned the bank in March 2007 as having one of the best nationwide checking accounts. At that time the rate was 4.03% APY which was low compared to many other reward checking accounts so it fell off my radar. The rate has held up well, and I'm surprised it took me this long to write a post on it.
The bank's ratings for safety and soundness are strong: 5 stars (superior) at BauerFinancial and 4 stars (sound) at Bankrate.com. Both ratings are based on 12/31/08 financial data. The bank has been FDIC insured since 1934 (FDIC Certificate # 5548). It's a small bank with one office in Taylor, Texas (northeast of Austin). It has $168 million in assets and $134 million in deposits.
Other Reward Checking Accounts
To find reward checking accounts in other areas of the nation or to learn more about these accounts, please refer to my High Yield Checking website.
- 12/14/10: 0.75% APY
- 06/25/10: 1.05% APY
- 05/11/10: 1.35% APY
- 02/26/10: 1.68% APY
- 01/07/10: 2.05% APY
- 10/15/09: 2.65% APY
- 01/22/08: 3.28% APY
I will skip this bank, it is not for me.
I will shy way from such small bank and the ACH is not adequate for me.
Only $30 Millions is the difference between assets and liabilities.
If only 300 people open $100K reward accounts, the banks becomes insolvent.
The credit rating agencies are joke.
You are correct, also your reasoning works downwards from the assets.
If 300 people close the accounts with $100K each, the end result is the same unless they can replace them with new accounts with less liabilities, which makes it improbable.
ACH transfers are next day, and the funds are made available immediately. Transfer limits are more flexible than their standard policy states, as discussed in some detail on their FAQ page. I've submitted an ACH push for higher than $2,500, and an ACH pull for MUCH higher than $2,500 (higher than even Ally Bank would let me make), and both were processed right on schedule and without my having to request special permission or provide any credit information. They may have been manually approved, and it probably depends to some extent on your particular banking relationship, but it's been transparent to me. You do need to send them a voided check or deposit slip or bank statement for each account you want to link, but other than that the online interface is very nice.
The online bill pay uses CheckFree.
They give you free checks.
ATM fees are automatically refunded the following day.
Internet purchases DO count toward the 10 required debit card transactions.
Customer service is fine. No problem adding five beneficiaries to increase FDIC coverage to $1.25 million.
And their rating at Bankrate.com is 5 stars.
Your FDIC coverage statement is totally false. Do your homework and then post.
Most people do not use the bank's own ACH, which is usually slow and with low limit.