Most reward checking accounts continue to offer rates much higher than online savings account rates. However, rates have fallen. In addition, banks have reduced the balance caps which is another way a bank can reduce the interest they pay out. The latest example is at Bank2 in Oklahoma. This bank had offered their reward checking nationwide when it was launched in 2009. It had guaranteed 5.01% APY on balances up to $25K through 2009. Starting February 8th, Bank2 is lowering the rate to 4.01% APY, and in addition, it's lowering the balance cap to $15K. So only $15K can qualify for the 4.01%.
However, in an attempt not to lose deposits, the bank is offering a companion savings account called Great Rate Savings which will pay 2.01% APY on balances up to $35K if you meet the checking requirements. So if you have $50,000 in savings, you can distribute it as follows:
- $15,000 earning 4.01% in the Great Rate Checking
- $35,000 earning 2.01% in the Great Rate Savings
You just have to be careful that you meet the monthly checking requirements. Otherwise, the rate on the entire $50K will drop to only 0.10%. Also note, the debit card usage requirement increased from 10 to 12 (see my Bank2 review).
Other banks have been starting similar checking/savings combos in the last year. You can find several of these banks and credit unions at the Kasasa website. This is the website that was developed by the founders of reward checking, BancVue and FIRST ROI. They started with the website CheckingFinder.com which just listed reward checking accounts. One reason for the Kasasa brand appears to be an attempt to expand into other products like savings accounts.
One thing to note about Kasasa Saver accounts is that there are no banks which offer them nationwide. I only saw Aspire FCU for my zip code, and the Saver account had a very low balance cap of $10K.
One bank that's listed that you may recognize is First Arkansas Bank and Trust which is offering a Saver account that pays 2.04% APY on all balances when checking requirements are met. FABaT used to offer the accounts nationwide, but now it's only for their Arkansas market. I was hoping they would allow existing customers to open this Saver account, but I just called, and I was told even existing customers have to be local to qualify (see reward checking review).
One variant of this checking/savings combo is what Redneck Bank offers. It offers a reward checking account that pays 4% APY on balances up to $10K. In addition, it offers a savings account that pays 2% APY on balances up to $35K. However, unlike the above savings accounts, this one does not require that you to meet the checking requirements to qualify for the 2%. Refer to my Redneck Bank review for more details and details of its other two sister banks.
If you don't like the balance caps, there are still a few reward checking accounts without them, but there aren't any with top rates. City National Bank just recently cut their reward checking rate to 2.05% APY (see review).