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High Yield Reward Checking Account Statistics


I've made several improvements to my new High Yield Checking Deals website. One important change is the inclusion of reward checking statistics at the bottom of the page. The table currently includes 149 institutions offering reward checking accounts (50 from credit unions and 99 from banks). The average yield being offered by all of these reward checking accounts is 5.28% APY and an average balance cap of $36,141. These stats will be changed every time I update the table.

In addition to total averages, I've also include averages of the reward checking accounts based on the year when I first reported on it. This is intended to give some indication of how well the rates have held up. I first reported on 86 reward checking accounts in 2007, and these accounts now have an average yield of 5.14% APY with an average balance cap of $39,826. As you would suspect, those that I first reported on in 2008, have an higher average yield (5.51% APY). This is an indication that the initial rates are a bit of a teaser. However, there is not a whole lot of difference between the two. I reported on 4 reward checking accounts near the end of 2006, and these have an average yield of 4.67% APY. This is probably not enough to draw too many conclusions.

I also compare the average rates and balance caps between banks and credit unions. The reward checking yield average from 50 credit unions is 5.35% APY which is just above the average from the 99 banks (5.24% APY). Banks have the advantage on the balance caps ($38,182 vs $32,100).

I also have statistics from the 12 institutions which allow people from any state to open reward checking accounts. One thing that stands out is the difference in rates between those I first reported in 2007 vs the ones in 2008. The average yield for those in 2008 is 5.84% APY vs 4.59% APY in 2007. So for high yields, you're better off with a local-only reward checking account.

It should be noted that I probably have many rates that are out of date. I've been updating many over the last week, but with 149 institutions and with rates changing so fast these days, it's very likely that a few are still out of date. If you see any rates that have changed, please leave a comment in the post of that institution.
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Anonymous   |     |   Comment #1
Thanks for all the hard work! This is a very valuable resource!

One thing that would be very interesting to see (but also very hard to find) would be a summary of what the actual returns are for the average person after one year with a rewards account. How many months of high yield does the average person miss b/c of too few debit transactions?

Obviously the people who frequent this site would be very organized and would complete the debit card transactions, but I bet the reasons the banks make money is because they can advertise 6.01% yield, but in fact pay out an average of about 4.00% (or even lower!).

Not a task for you, Bank Deals guy, but just something I've been thinking about!
Anonymous   |     |   Comment #2
1. Members Choice CU is now 4.26%.
2. National 1st CU is available in almost all states.
Anonymous   |     |   Comment #3
The crazy thing is that alot of these banks are finding no profit on these types of accounts. In today's world, it is very hard to see someone using cash, either they are swiping a cc or a debit card. I think these accounts are doomed for failure. DanversBank is near my house and all the signs came down. Amazing for something is very profitable toI be on some little brochure....

Would be nice to see the financials on these banks/credit unions to see how much more deposits were they able to bring in through these agreesive rates.
Banking Guy
Banking Guy   |     |   Comment #4
I had talked with a VP of one of my credit unions about these reward checking accounts. He wasn't too enthusiastic about them. He claimed the credit union members were already using their debit cards in high numbers, so he didn't see much benefit to the credit union.

If they prove to be unprofitable, the banks can always just lower their rates. If the rates fall below the average online savings accounts, they won't be attractive to savers, but it'll still be better than the typical free checking account.

With Schwab's checking yield at 2.26% and Presidential's checking yield at 2.10%, banks may find it difficult to offer yields on reward checking over 3% if the benefits of the debit card requirements don't pan out.
Timothy   |     |   Comment #5
FYI, I applied for Heartland's reward checking online and got no response or confirmation. I emailed them after a few days and got no response! I went with another of the nationwide ones and it appears to be going thru fine. Beware of Heartland! Anyone else have success or trouble with them?
Anonymous   |     |   Comment #6
I opened an account with Heartland on 3/12/08. So far, I consider it a great account. Application went smooth. E-mails were answered in less than 24 hours. When I called I didn't have to go thru a bunch of menu's to get someone to talk to and they are very helpful and friendly. If you are still interested try mcortez@heartlandbankonline.com
Anonymous   |     |   Comment #7
West Texas State Bank allowed online account opening to any one.
No branch visit required,
Morticai   |     |   Comment #8
Of course these Rewards Checking Accounts are proving to be not as a profitable as promised. One example of proof is Southland Credit Union.

Southland CU started their Rewards account offering no balance cap and 5.25%.

On April 1st, they lowered the rate to 3% and instituted a balance cap of $50,000.

And of course we all remember that Arkansas bank that offered 6% and a $100,000 balance cap. (Not anymore.)

I predict that in the years to come, either Rewards Checking will either disappear altogether, or they will all be at such a low interest rate and/or balance cap to make them not worth having.

And finally, with the ease of being able to purchase iTunes songs or send someone money via PayPal, there is no excuse for someone not being able to make their debit card requirements. (Unless one was injured, of course.)
Anonymous   |     |   Comment #9
It is true that many pioneers have lowered their APY but the table shows there still are a few hold out and I opened on account todat @ 6.01%
Bill   |     |   Comment #10
These accounts will definately disappear, for the average person that keeps 1000-2000, if you loose one month, oh well, but alot people are maxing out these accounts to the balance caps to take advantage of these rates and its costing the banks alot of money. This is just to ease the credit crunch. So far we only have seen the mortgage crisis with the big banks. Wait till the Auto Loan Crisis hit.

remember, alot of people were buying 50-60-70k cars which they could not afford at 48 months, 60 at the most. There is alot of loans at 72-84 months, so maybe this is a way for these small banks to stay within fed guidelines of a well capitized bank.

Auto Loans are next....
Anonymous   |     |   Comment #11
It seems Bill has a good point. This explains why they cap at 25k. Sites like this and FW are killing one of the best kept secrets. The pioneers like SBoT have just died from too much publicity.
JL   |     |   Comment #12
i have a checking account with national city, but i recently came across an offer from schwab for a high yield (3%) checking account with no minimum, no fees, free atm use, etc. i was ready to switch until i realized that, even though i get no return on my nat. city account, the rewards i get might exceed what i would get from the schwab account. am I missing something?