Just a few days ago readers reported that Arizona Bank & Trust also decided to end allowing out-of-state accounts. I first reported on this bank in February, but I did not receive confirmation about nationwide availability until April.
To be able to pay the high interest, banks probably have to depend on the average customer maintaining a balance far below the typical $25K cap and making hundreds or thousands of dollars of debit card purchases each month. Banks get around 1% to 2% in fees with each debit card purchase, so large purchases definitely help their profits. I hope we don't see banks adding minimum purchase requirements.
In addition to adding minimum purchase requirements, banks can also reduce the interest rates or cut the maximum balances that earn the top yield. Rate cuts have been happening for a while. One new development is smaller balance caps. The $20K cap is becoming more popular, and my High Yield Checking website now lists 2 reward checking accounts with only a $10K cap.
In my opinion, banks and credit unions that don't offer these reward checking accounts nationwide will likely have a higher percentage of the average customer. A credit union that has offered a 6.01% reward checking account since June of 2007 mentioned to me in April that they had over 7,000 reward accounts with a total $45 million in deposits. This comes out to an average balance of about $6,500 which is far under their balance cap of $25,000. This credit union restricts its membership to only a few counties. It would be interesting to see what the average balances are from banks and credit unions that have nationwide availability.
The above example shows that the average person doesn't cost the credit union too much interest. I did not receive any debit card usage data. It would be interesting to know the average debit card purchases each month. If it's $1,000 and the credit union receives 2% in fees from merchants, that would cover $20 of the $32 of interest that the credit union would pay for the $6,500 average balance.
The changes from these two banks will bring down the number of nationwide institutions on my reward checking list to 15. I hope these others can maintain their nationwide availablity.
To find reward checking accounts in your area or to learn more about these accounts, please refer to my High Yield Checking website.