St. Paul Federal Credit Union Has Unique Reward Checking Account
St. Paul Federal Credit Union's (St. Paul Federal) reward checking account, Simply Checking, has maintained its three APYs (determined by monthly debit card usage) since the account was added to the product line in 2016.
In addition to the monthly debit card transaction (average $5 per transaction), the following requirements must be met to qualify for the stated APYs.
- At least two direct deposits of at least $500 each from a qualified payroll or pension provider
- Sign up for eStatements
- Log into eBanking at least once a month
If the qualifying requirements are not met, the Simply Checking account does not earn any interest.
The Simply Checking account has no minimum balance requirement, monthly service fee, or minimum opening deposit requirement. Unlimited check writing is available and a free Visa debit card will be issued following account opening. There is a limit of one Simply Checking account per Social Security number.
Availability
Headquartered in Saint Paul, Minnesota, the aptly-named St. Paul Federal Credit Union has a field of membership (FOM) that is both residency and employment based.
Residency: Individuals who live, work, worship, or do business in Saint Paul or downtown Minneapolis are eligible to join. Residents of the Twin Cities Underserved Area also qualify for membership.
Employment: Employees of several SEGs, including Local 110, International Brotherhood of Electrical Workers and some Federal Government agencies, are eligible for membership.
Family Relationship: Immediate family members of individuals who qualify for membership are eligible to join.
Complete membership details are available on St. Paul Federal’s Membership Requirements page.
Joining St. Paul Federal and/or opening a CD can be done online, or at either of two Minnesota branches, both of which are located in Saint Paul.
With a minimum deposit of $5, you can start saving today by
opening a St. Paul Federal Credit Union Capital Savings Account.
St. Paul Federal participates in the CO-OP Shared Branch network.
By using a CO-OP Shared Branch, your membership and accounts remain at St. Paul Federal Credit Union, but you can access your accounts and conduct business with St. Paul Federal through any of the convenient CO-OP Shared Branch Locations.
Credit Union Overview
St. Paul Federal Credit Union has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 0.05% (excellent) based on December 31, 2020 data. In the past year, St. Paul Federal has increased its total non-brokered deposits by $45.93 million, an excellent annual growth rate of 28.76%. Please refer to our financial overview of St. Paul Federal Credit Union (NCUA Charter # 24358) for more details.
In 1953, a group of St. Paul electricians obtained a charter to form a credit union for the benefits of members of the International Brotherhood of Electrical Workers, Local 110; soon thereafter, St. Paul Federal Credit Union opened its doors for business. The original charter was converted to a federal charter in 1987, allowing family members of the electricians to be included in the FOM. Seventeen years later, the charter was expanded to include the entire St. Paul community. Following a merger with Capital Trust Federal Credit Union in 2008, St. Paul FCU’s membership has grown to nearly 13,000 members, with assets in excess of $232 million.
How Simply Checking Compares
When compared to the High Yield Reward Checking Accounts tracked by DepositAccounts.com, which are available within the St. Paul-Minneapolis metropolitan area and have maximum qualifying balances of at least $20k, St. Paul Federal Credit Union’s Simply Checking APY currently ranks first.
When compared to the High Yield Reward Checking Accounts tracked by DepositAccounts.com, which are available within the St. Paul-Minneapolis metropolitan area and have maximum qualifying balances of at least $15k, St. Paul Federal Credit Union’s Simply Checking APY currently ranks first.
The above information and rates are accurate as of 4/17/2021.
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.
I use the word compensation instead of profit in this case because these things are more like a job than an investment return.
For a typical RCA: (3% APY, $20K, 12 debit card transactions): $20K x 3%/ (12 months x 12 transactions) = $4.167 per transaction worthiness.
For SPFCU RCA: (4.99%, $20K, 60 debit card transactions): $20K x 4.99%/(12 months x 60 transactions) = $1.386 per transaction worthiness.
Thus, as P_D rightfully pointed out, just gimmicks with nearly-worthless effort, compared to other typical RCAs.
Pardon me in advance for any calculation errors :)
Your second calc looks right to me. But it shows something different than mine.
The reason we differ a little in the $ per transaction is that I subtracted 0.75% from the 4.99% in my calculation and used 4.24% instead of the 4.99% that you used. So I came up with a "compensation" of $1.18 per transaction versus your result of $1.386 per transaction.
My reasoning was that I assumed the first 0.75% of the 4.99% is what you can get in another liquid insured deposit account without doing any transactions at all. So that part isn't "compensation" for the extra effort, it's a standard market return. The compensation is only the excess of the interest over the market rate interest which I estimated as 4.99% - 0.75% = 4.24%.
So your calculation shows the approximate gross interest earned per transaction, and mine shows an estimate of what portion of that gross interest represents net profit (or compensation for the extra work).
I like this "transaction worthiness" formula (both your version and mine:)) since it provides a sober-minded view of what the reality FIs are offering.
Like any other banking product, this reward checking account should be considered in its entirety. St. Paul Federal Credit Union's "Simply Checking" product offers a yield of 2.99% on a maximum of $10,000, with 20 monthly transactions of at least $5.
Any fair evaluation of the product should consider that aspect too. 2.99% is a very good (not tops) yield; the $10,000 maximum is on the low side; the 20 monthly transactions are on the high side; the minimum transaction amount will not appeal to collectors of Amazon gift cards, and people who purchase gas in twenty-five cent quantities (which might help the credit union maintain the 2.99% APY).
Compared to other reward checking accounts, the above does not strike me as such a bad deal. Others may feel differently about that. But fairness requires that an evaluation of the "Simply Checking" account takes into consideration the entirety of the product.
And, for some people, compensation per transaction may be the critical consideration; others may give it less (or no) weight.
For me, (2.99%, $10K, 20 transactions/month) is just not worth it, either. $10K may be too low. 20 transactions (no matter how simple it is per transactions) per RCA per month may still be too high; especially for those who have "multiple" RCAs.
And there may be better RCA options; e.g., Lake Michigan Credit Union (3%, $15K, 10 transactions/month).
Again, just me.:)
Alan1, you are fully correct that there are trade-offs for each one to consider. For example, someone may want to trade higher APY for larger amount and fewer transactions, say Tremont Credit Union (2%, $50K, 12 transactions/month).
Cheers:)
I appreciate the input of all posters above, and agree in part with their numbers. Since I'm not geographically eligible for this offer I don't have “a dog in this fight”. However, as an intellectual exercise one might alternatively look at it as follows, on a monthly basis.
The “worthiness” of a transaction is also a function of the time taken for an individual to perform that transaction. If one can from the comfort of their chair fire off a qualifying debitcard charge every 10 seconds, then 60 can be satisfied in 10 minutes. Add 30 seconds for doing 1 ACH debit transfer from the account to keep the balance at $20K. Add 30 seconds for downloading and reconciling each monthly statement with the previous one, and your total labor is 11 minutes/month. (I'm not including the time needed to set up the direct deposits since that's a one-off.)
Apparently an average debitcard charge of $5 is required (that's $5 * 60 = $300 per month). Add $50 for “just-in-case”, giving $350. Frankly, to me this is the most annoying part of the offer.
Had you put these charges on a 2.5% cash rewards credit card instead you would have made $350 * 0.025 or $8.75 in rewards. Since those rewards would be tax-free, let's up that to an estimated $12 as the taxable equivalent.
For gross revenue let's assume an average monthly balance of $20K minus $350 or $19,650 (actually it would be slightly higher), which multiplied by 0.0499 equals $980.53, which divided by 12 equals $81.71 for the average month. So $81.71 minus $12 leaves $69.71.
Now, my “riskless and work-less rate of return” for liquid funds happens to be 1.4%, currently (but this will drop in several months). $20K * 0.014 = 280, divided by 12 equals $23.33 for the average month. $69.71 minus $23.333 leaves a profit of $46.38, or an hourly rate of ($46.38 / 11 *60 = $252.98). Not bad work if you can get it, as Grandpa used to say.
In addition, you have liquid funds that in a pinch - or when you see an opportunity - can be accessed quickly, without an early withdrawal penalty.
I might disagree with you on the cashback vs. RCA interest trade before; but now that I lost all my P2P transaction features (e.g., Serve, Google Pay; Google Pay web-option just disappeared on 5 April 2021) that do not sacrifice my cashback from credit cards at all, I fully agree with you! It is indeed an important factor to consider.
You give a good demonstration of why all such analyses must be personalized to the investor in order to determine a more accurate "TW" (If I may use 51hh's term.)
By necessity, a general analysis requires generally applicable assumptions and should only be considered a demonstration analysis. In your case your assumptions for the opportunity costs are particular to you and may not be available to others. That's the right way to do it for you.