One interesting thing mentioned in the article is the potential effect of the FDIC proposal for rate restrictions on troubled banks. This shouldn't have much effect. According to BancVue, less than 2% of BancVue members are inadequately capitalized.
The article didn't give many details about how profitable these accounts have been for the banks. It repeated the point about how electronic features of these accounts (such as e-statements) help the banks save money. This may help the banks keep the rates higher than other brick and mortar accounts, but this won't help them maintain rates higher than online savings accounts which already have all these electronic features.
One other aspect of reward checking that helps banks is that reward checking customers tend to be more profitable customers. The CFO of Sutton Bank, which offers reward checking, stated that "combination of products a reward checking account holder has is more profitable than a regular account holder."
Another indication that these accounts are profitable to the banks is how BancVue is paid. According to that CFO, the "bank pays BancVue a fee that is tied to the performance of the product." Since BancVue continues to add new banks, it appears these reward checking accounts must be doing well for the banks and for BancVue.
For the banks, there's not much risk. They're free to lower the rates at any time. Unfortunately, many have been doing that over the last few months. In my list of 321 reward checking accounts at my High Yield Checking website, the average APY is 4.38%. This continues to drop, but it's still a decent yield when the average online savings account yield is below 3%. I'll keep using reward checking as long as they can keep rates at least 1% higher than my online savings account rates.
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