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Danversbank's Free Rewards Checking Account - Application Review


Last week I reviewed the account opening process of ViewPoint Bank's Absolute Checking Account. This is one of the two reward checking accounts available nationwide that still offer 4% APY on balances of at least $25K. The other one is the Free Reward Checking offered by Danversbank. A reader has recently gone through the application process for both of these accounts and has emailed me all of the details. In this post I'll review Danversbank's application process.

Danversbank's Rate History and Future Rate Concerns

Danversbank has a fairly long history with its reward checking account. I first reviewed the account in April 2007 when the top rate was 6.01% APY on balances up to $100K. Both the rate and balance cap fell, but compared to others, the fall hasn't been too bad. As of 6/23/2010, it's paying 4.01% APY on balances up to $25K.

I'm a little worried about Danversbank keeping this rate and balance cap. Last month Danversbank's DBK Online Savings Account yield fell from 1.35% to 1.00% APY. This internet savings account rate is now below average. If the reward checking rate were to fall below the average reward checking rate, it would be under 3.00%.

Danversbank's Application Process

One advantage of Danversbank's reward checking account over ViewPoint's is the easy account application process. Here's how the reader described the Danversbank application process:

This process is pretty impressive. Smooth...probably like all should be.

The reader applied online for Danversbank's reward checking on a Friday, and in the application he specified his initial deposit to be made by an ACH transfer from his current bank account (minimum initial deposit is $100). He was able to enroll for Online Banking and Bill Pay right away since they gave an account number at the end of the application process.

On Monday the trial deposits were made to his bank account, and on Tuesday he verified the trial deposits at Danversbank. It took a week before the initial deposit was debited from his bank account. It showed up at Danversbank the following day.

The reader mentioned one issue during that week while he was waiting for the initial deposit to be credited to the account. This may be the reason for the delay from the trial deposit verification to the initial deposit credit. Before the initial deposit was credited, he tried to link his Danversbank to his Discover Bank account via Discover's ACH system. Discover follows the two trial deposits with a debit. This caused a problem at Danversbank. The debit triggered a NSF with a $25 fee even though it was equal to the sum of the two trial deposits. The reader was able to be reimbursed for this fee, but this required a phone call to Danversbank. In short, be careful about linking to an account too early especially if there are any debits in the process.

Preparing to Meet the Monthly Requirements

With the account opened, he's able to push funds into the account via ACH transfers from his online bank. His plan is to use ACH transfers from his online bank to meet the recurring ACH requirement. The use of Danversbank's online bill pay can also be used to meet this requirement.

One reward checking requirement that's easy to meet at Danversbank is receiving online statements. The reader noted that the enrollment in online statements is automatic. This isn't always the case at other banks.

The last requirement is the debit card usage (12 per month). He's still waiting for the debit card in the mail with an expected arrival this week. Note, Danversbank waives the requirements for the first month. This is typical for reward checking accounts. You don't have to worry if the debit card arrives late. Another thing to note about Danversbank's debit card usage requirement is that any debit card purchase counts toward the monthly total, both PIN and signature based (also called credit).

Other Reward Checking Accounts

There are still some reward checking accounts that are paying over 5% APY. However, you have to live in their market area to open those accounts. Hopefully, with our reward checking tables, you'll be able to find one near where you live.

Share Your Experiences with a Bank or Credit Union and Win $250

Have you been impressed with your bank's application process? Or did they make it difficult? Please consider sharing your experiences in our Bank and Credit Union Reviews forum. In this forum you can share any online or brick-and-mortar experience that you had with any bank or credit union. And if you post your experiences by July 15th, you can participate in our sweepstakes in which you can win up to $250 (see official rules of our DepositAccounts.com sweepstakes).

Related Pages: checking account

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Anonymous   |     |   Comment #1
I don't understand how institutions can afford to pay 5% on a reward checking account when the best available nationwide are around 4% and the interest rates continue to drop at institutions every day it seems.  I don't think that the debit card companies are charging vendors more at the 5% reward cards than they are on the ones offering much lower interest rates.   I don't see why the rate cut on a money market account at Danvers would be a sign of things to come for the  the interest rate paid on reward checking. They are totally different products that generate income for the bank in much different ways.  If anything, I think that Danvers was able to continue to offer the 4% interest because they are a very financially sound bank, and there was no pressure from the feds to lower rates like there was on financially weak institutions that were offering rewards checking.  Danvers has a good reward checking and hope it continues.
scottj   |     |   Comment #3
Also having a relationship with Danvers can be very useful, I just did another 36 month 3% CD with them. Listed rate for 36 month is 2.50% but they are great about giving .50% bump on any term.
FG (anonymous)   |     |   Comment #4
only 5 thought it would be 10 by now come on lava people you  can do better
Igor (anonymous)   |     |   Comment #5
Danvers doesn't even offer an online IRA option, you have to walk in.
Alan   |     |   Comment #6
How does one get the 0.5% increase on CD rates at Danvers?
Anonymous   |     |   Comment #7
what happened to number 2
Tom (anonymous)   |     |   Comment #8
Rewards Checking is only viable if the bank can put the money to work and earn the interest spread.  If you've read BancVUE's marketing literature for the Rewards Checking product, you'll know that debit card fees, non-qualifying months, and regular bank fees make up only a small portion of the expected revenues.  The bank *must* make the bulk of its money by lending out the incoming deposits.

This is why so many small banks have to shut down to nationwide deposits.  If you're lending to farmers in Iowa, then you can't handle a large rush of incoming deposits.  The farmers will only need so much financing.  In contrast, Danversbank has two dozen branches, including one in Boston proper.  They also have their hooks in the commercial lending market, with an asset-based lending arm.  This is one of the reasons that Danversbank has been able to hold on for longer than most.
scottj   |     |   Comment #9
Got another 36 month 3% CD yesterday. Not sure if people who don't have a relationship with them can get it. If you do you just go in with new money and ask. Great bank to deal with.
Anonymous   |     |   Comment #10
First you say "at least $25K", then you say "up to $25K".
Dave (anonymous)   |     |   Comment #11
I am wondering how these banks can pay these rates on deposits in a reward checking account? You do not get the same from a savings account and the bank can probably count on the money being parked in the savings vs checking which is reliable to them. Merchant fees help a little from required debit card usage but can't be much.  I know banks collect more in fees from signature based transactions than PIN.  US Bank sent an email out saying remember you only get the rewards if you sign for the transaction! Subtley tring to get you to change a habit to help them LOL!

Anyway, maybe the banks back credit cards with checking deposits so they can get away with the higher rates as the spreads are higher on credit cards.  Has to be a loophole somewhere, otherwise the FDIC would be classifying this as "hot money".