Quontic Bank Revamps High Interest Checking Rate Structure

The simple green arrow next to Quontic Bank’s High Interest Checking (HIC) in yesterday’s Best Bank Account Interest Rates Summary doesn’t begin to describe the various changes the HIC has recently experienced.

Here’s a summary of the changes:

• The 1.01% APY is still in effect, but the qualifying balance cap has been increased from $100k to $150k.
• The three rate tiers previously in effect (up to $100k, $100k-$250k, $250k-$1m) have been consolidated into two rate tiers: up to $150k and $150k-$1m.
• With the $100k-$250k tier eliminated, its previous 0.65% APY has disappeared. The new second rate tier ($150k-$1m) now earns 0.35% APY.
• The HIC now offers blended APYs.

While the first three bullets are self-explanatory, the last merits some clarification. Previously, if the balance exceeded a rate tier, the entire balance would earn the lower rate. Without blended APYs, a $150,000.00 balance would earn 1.01% APY, while an entire $150,000.01 balance would only earn 0.35% APY. The new blended APYs break down as follows:

• Balances from $100k to $150k earn 1.01% APY.
• Balances from $150k+ to $250k earn a blended APY from 1.01% to 0.75% APY.
• Balances from $250k+ to $1m earn a blended APY from 0.75% to 0.45% APY.

The bottom line is that account holders will now earn more interest for balances over $100k. Balances of $100k to $1m will earn higher APYs with the new rate structure. For example, as of this week, balances of $100k-$250k will not earn less than 0.75% APY; last week, that same balance range only earned 0.65% APY. The same scenario applies to balances between $250k and $1m: as of this week that balance range will never earn less than 0.45% APY, but last week it only earned 0.35% APY.

The HIC’s only qualifying requirement is at least ten debit card purchases ($10 minimum each). There is no monthly maintenance fee, eStatements are free, and the minimum opening deposit is $100. While there is no reimbursement for ATM fees, High Interest Checking customers can avoid “foreign” ATM fees by using any of,

55,000+ AllPoint® Network ATMs, 28,000+ MoneyPass Network ATMs,
7,000 SUM® program ATMs, or nearly 700 Citibank® branch ATMs.

Initial funding of a new HIC account can be done “from an existing Quontic Bank account, from an account at another bank, by ACH transfer, or by mailing us a check.” Once an HIC account is established, additional deposits can be made “through remote check deposit via our convenient Mobile App, by setting up direct deposit from your work, by mailing a check, depositing money via ACH, or by wire.”

Product History

Added to the product line in September 2019, Quontic’s rewards checking account (RCA) was originally called Amplify Interest Checking and earned 2.00% APY on qualifying balances up $1 million. In early 2020, Quontic’s RCA experienced three changes: a new name (High Interest Checking), the elimination of an ACH requirement, and a lower rate of 1.50% APY on qualifying balances up to $1 million. The rate was further lowered to 1.25% APY (September 2020) and then to 1.01% APY (October 2020), all the while maintaining the $1 million qualifying balance cap. The most significant change occurred four months ago, when tiered APYs were introduced, with the top qualifying balance cap reduced from $1 million to $100k, decimating the HIC’s potential earnings.

The following is quoted from my September 2020 blog post about the High Interest Checking account. While the quoted dollar amounts have changed, the basic premise is still valid, and unfortunately, my prediction was correct.

Now that most online savings account rates have fallen well below 1%, this RCA has become a very competitive alternative, but I’m concerned that the rate and/or balance cap won’t last. The only way Quontic can afford to pay this rate is from the interchange revenue generated by the debit card purchases. But that revenue only goes so far.

$500k in a High Interest Checking account could earn $6,250 of interest annually. In comparison, the same $500k in a Marcus by Goldman Sachs High-yield Online Savings (0.60% APY) could earn $3,000. It takes a lot of debit card purchases to pay for an extra $3,250 of interest. Let’s assume Quontic gets 1% of interchange revenue for each debit card purchase. A customer would have to spend $325,000 annually with their debit card to pay for the interest. All that being said, I don’t have high hopes that Quontic will be able to be maintained the rate and/or balance cap.

Availability

Headquartered in New York City, Quontic Bank offers its product line online to all U.S. citizens/residents aliens, 18 years or older, who have a valid Social Security number.

Opening a High Interest Checking account can be done online, supposedly in “3 minutes or less.”

The retail branch in Astoria (Queens) has become Quontic's third New York home mortgage office; all three are now open to walk-in traffic during normal business hours.

Bank Overview

Quontic Bank has an overall health grade of "B" at DepositAccounts.com, with a Texas Ratio of 12.34% (excellent), based on June 30, 2021 data. In the past year, the Bank has increased its total non-brokered deposits by $146.73 million, an excellent annual growth rate of 37.44%. Please refer to our financial overview of Quontic Bank (FDIC Certificate # 57807) for more details.

Quontic Bank's overall health grade has been hurt by a low Capitalization grade. Quontic Bank has participated in the Paycheck Payment Program (PPP) and has used the PPP Liquidity Facility. This has caused a large increase in assets without an increase in equity capital or loan loss provisions, resulting in a low Capitalization grade. Since the Fed backs the PPP loans, the low Capitalization grade should be considered temporary without adding solvency risk.

Quontic Bank is a young bank, with its 12^th anniversary occurring at the end of the year. In late 2009, Steven Schnall, a New York real estate developer, bought the Long Island-based Golden First Bank, which was in financial trouble after only four years of operation. Schnall recapitalized the bank, brought in a new management team, and rebranded the institution as Quontic Bank. Currently the 53^rd largest bank headquartered in New York state, Quontic Bank has assets in excess of $1.8 billion.

At Quontic’s root is “ontic,” meaning real or factual existence. The truth is that there is an extraordinary diversity of circumstances in the real and factual existence of our customers’ lives. We believe banking needs to be adaptive to those circumstances, so we ask the Qualitative and Quantitative questions that enable us to do so. Hence Quontic – an adaptive form of “ontic.” We like how it sounds and what it stands for.

How the High Interest Checking Compares

Rather than making a comparison based on strictly on APYs/maximum qualifying balances, the following table uses the potential maximum earnings for a $150k balance as the determinant. When compared to the High Yield Rewards Checking Accounts tracked by DepositAccounts.com that are available nationwide, Quontic Bank’s High Interest Checking account currently offers the second highest potential in annual earnings.

The above information and rates are accurate as of 9/15/2021.

To look for the best Reward Checking Account rates, both nationwide and state specific, please refer to our High Yield Reward Checking Account Rates Table page.