The three internet banks that are under the Huckabay family of banks have announced on their websites that they are reducing the yield of their Rewards Checking account from 2.00% to 1.50% APY effective March 20, 2014. This top rate will continue to apply to balances of up to $10,000. There’s no mention of changes to the rate for balances over $10,000. That rate is currently 0.50%. These rates require at least 10 debit card purchases a month and e-statements.
AmericaNet Bank, Redneck Bank and Evantage Banks have been offering these Rewards Checking accounts since 2008 when the yield was 5.25% for balances up to $25,000. The balance cap fell to $10,000 in early 2009, and the rate started to fall just after that. The 2.00% APY had held since December 2012.
There were a few years when these banks stopped accepting new customers. Redneck Bank was the first to stop accepting new customers in 2009. In February 2011, AmericaNet and Evantage did the same. Existing customers weren't affected while these accounts were closed to new customers. The banks reopened these accounts to new customers in December 2012.
When Is a Reward Checking Account No Longer Worthwhile?
It’s hard for me to consider a 1.50% APY with a $10K balance cap as worthwhile when it requires 10 debit card purchases per month. To determine if the account is worthwhile, I compare the reward checking account to your best savings account. How much more money per year or per month are you earning from your reward checking account compared to what you would have earned if you just kept the money in your savings account? For this case, the reward checking account will pay 50 basis points over a top internet savings account. For a $10K balance, that comes out to $50 extra interest per year or $4.17 per month. You then have to factor in taxes which will reduce the $4.17 per month based on your tax bracket.
If you have to live with a relatively low rate on a reward checking account, you at least want a large balance cap. That’s a major benefit of Bank of Internet USA’s Rewards Checking account. It pays only a 1.25% APY, but that applies to balances of up to $150,000 (as of 2/24/2014). And this rate has held for over 2 ½ years. Of course, the rate and balance cap aren't guaranteed to last. The current $150,000 balance cap was put in place just over a year ago. There was no balance cap before that.
Rates of 2.00% to 3.00% with balance caps of at least $10K are not as common as they used to be. For nationally available accounts, we only have 9 of these. Five of these have balance caps of $15K.
How low of a rate and balance cap on a reward checking account can you accept before you just move your money to an internet savings or money market account?
To find other reward checking accounts that are available nationwide or in your state, please refer to our high-interest reward checking account table.
To learn more about high-interest reward checking accounts, please refer to my post 10 Common Traits of High-Yield Reward Checking Accounts.