Reward Checking Rate Leader Slashes Rate


Over the last few years we've seen many rate cuts on reward checking accounts, and sometimes those cuts can be big. That was the case on Friday at Coppermark Bank. Its reward checking account has long been a rate leader with a 4.00% APY for up to $25K since I reviewed this account in 2009. That ended last Friday when the rate plummeted from 4% to 1.25% APY. The balance cap of $25K remains the same. Thanks to DA reader Pearlbrown who posted on this news in this forum thread. There had been speculation that this rate cut was due to Coppermark's upcoming merger with Properity Bank. However, Pearlbrown has learned from the bank's CSRs that the timing of the rate drop is not related to the merger.

This shows a downside with reward checking accounts. High rates often don't last, and when they fall, they can fall fast. Also, it shows that a long history of top rates is no guarantee that the rates will remain competitive.

Every time we see another rate cut, I wonder what rate is sustainable for reward checking accounts. I reviewed the math behind reward checking in 2010. I used data that I had received from a credit union which showed the average reward checking balance to be $7,700 and the average monthly debit card purchases to be $900. Based on $900 monthly purchases and a 1% interchange fee, the average monthly revenue banks would receive is $9. If the $9 is returned to the account holders as interest and if the average balance is $7,700, that would provide account holders with an interest rate for that month of 1.40% ($9*12/$7,700).

Not all customers meet the monthly requirements, so that can allow the bank to offer higher interest rates. Also, the above stats were based on a reward checking account with a $25K balance cap. Lower balance caps will likely result in lower average balances which will also allow the bank to offer higher rates.

Based on the above math, it seems like banks will have a difficult time to keep their reward checking accounts at 2.00% or above unless they have small balance caps. The only nationally available reward checking accounts that have 3% rates have balance caps of $5K to $15K. There are still several local deals with rates between 3% and 4% for balances up to $25K. The best deal continues to be at Southwest Airlines Federal Credit Union which still offers 4.00% APY for balances up to $25K. This credit union isn't really a local deal. Its field of membership is narrow since it's primarily based on a few employee groups.

To find reward checking accounts in other areas of the nation, please refer to the reward checking section of To learn more about reward checking, please refer to this reward checking overview.

Anonymous   |     |   Comment #1
First of all thank you very much for giving us all a heads up on this change.  Too often there is little of no advanced warning issued to customers of banks regarding rate cuts.  Several times I have had to find out the hard way, which is only after reviewing statements that show lower interest after the fact.  On a note about reward checking accounts, They are increasingly becoming not worth the trouble.  I personally have stopped opening new accounts, because even if you find one that looks promising, usually they drop their rates, lower balance caps or both within months of opening them up.  At only 0.5% to 1.0% over what you can get from an online savings account, I seriously question the merit of dealing with these accounts anymore.  At the same time I do understand that CD rates have plummetted as well.  There really doesnt seem to be any palitable way to earn decent interest now-a-days without taking on serious risk in the stock market or some other venture.  Its unfortunate that the Federal Reserve is thowing us all under the bus.  I can only hope that their hands are forced one day and we can get back to getting a fair return on our money without playing at the financial casinos.
Anonymous   |     |   Comment #2
I agree reward checking is no longer worth doing. It had a good run of 3-4 years but now it has "jumped the shark".
Anonymous   |     |   Comment #3
Y'all need to check out peer-lending. Couple of companies do it .....and I think it is promising. Unfortunately I'm in a state that they don't operate in.....otherwise I would try it. You have so much more control compared to stocks. You can pick and choose who you want to invest in. Returns can be as high as 15%. One thing that scares me a little is the company itself.....what if it goes bankrupt? Still......I would be willing to risk a moderate amount.
Anonymous   |     |   Comment #4
Just to get $30-50 a month and go through all those purchases, no longer makes sense to me.

I closed them all except for only one.
Anonymous   |     |   Comment #5
I am still hanging onto mine 2.50% up to 25,000 and .020 above.  It is a bit of a lifeline for this retiree.
jep1960   |     |   Comment #6
In my opinion, the "ditch account" point is at 2%, under that, you are better off in a free, no interest paying, checking account. To do the POS transactions, typically 10-20 per month, takes time, and a few dollars for the transactions. Anyone who is familar with these accounts should know that any projection of a BIG use of the debit card used with the reward account is highly unlikely. I know my use of my debit cards with the reward accounts I have had have been VERY limited. It makes more sense for me to leave the money in the reward account and get miles or points with my credit cards, then pay the balance at the due date.
Anonymous   |     |   Comment #7
Yep, it's been a good run but it's over.  I can still get 2.5% at another local bank.


Thanks for the notice, Sloppermark (sarcasm).  Most other banks will give notice when they drop the rate, especially a huge 4%->1.25% drop.


4.00% Reward Checking Account at Coppermark Bank in TX & OK
Coppermark Bank is offering a reward checking account called Free High-Interest Checking. The account offers the following features if certain monthly requirements are met:
  • 4.00% APY on balances up to $25,000
  • 0.10% APY on balances over $25,000
  • 0.10% base rate if qualifications are not met
  • ATM surcharges refunded up to $25 per month
The monthly requirements include:
  • 16 debit card purchases (PIN or signature based)
  • one ACH credit (includes direct deposit)
  • receive e-statements
Additional features of the account regardless of the monthly requirements include:
  • no minimum balance requirement
  • no monthly fees
  • free bill pay
This appears to be a pretty typical reward checking...

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