High-yield reward checking accounts continue to hold up better than internet savings account in this record low interest rate environment. They may have a harder time as new regulations take effect that lowers the fees that banks receive from overdrafts and debit card purchases. We'll have to wait and see how much of an impact these new regulations will have. Even if rates go down, they may still be good deals compared to internet savings accounts.
For those not familiar with reward checking, these checking accounts offer customers a high yield for up to a certain balance ($25K is common) if you meet certain monthly requirements which typically include around 10 debit card purchases, direct deposit/ACH transaction and e-statements. Many also offer ATM fee refunds if you meet the monthly requirements. Most are free checking accounts even if you don't meet the monthly requirements.
In this short list of reward checking accounts, I decided to include those which have the best rates that apply to balances of at least $25,000. Some offer 4% but the maximum balance for this yield is only $10K or $15K.
The ones listed are available nationwide as of 7/21/10. Banks and credit unions often change their policies and restrict these to their local market areas. So some of these institutions may fall of this list.
As of 7/21/2010, four of the five offer at least 4.00% APY on balances of at least $25,000. As we have seen in the past, both the rate and the balance cap may fall. Two of them have held up well over the last few years. Another two are new, and we'll have to wait and see how well they will hold up.
You may not always want to go with the ones offering the best rates. The ease of the application process is another factor to consider. Also, you may want to consider the chance that they'll continue to be a rate leader. This is not easy, but factors like the rate history and the size of the institution can provide some indication about what to expect.
- Randolph Bank & Trust Company is a new one. My first post was just last week. I and other readers have confirmed that the bank is allowing people from any state to apply. Please note that it's a small bank, and small banks often change their policy on availability. Update 8/12/10: The account is now restricted to NC residents.
- ViewPoint Bank - top rate for up to $50K. First post was on May 2008. As I described in this post, opening this account is not easy. Update 7/27/10: The account is now limited to Texas residents.
- Danversbank - top rate for up to $25K. First post was over 3 years ago so it has quite a bit of history. Readers have reported an easy account opening process.
- South Division Credit Union - This Illinois credit union is on the nationwide list since its field of membership makes it easy for anyone in the U.S. to join. However, it's a small credit union which primarily serves an area in the Chicago suburbs. My first post on this reward checking account was in November 2009. The rate has remained the same since then.
- Westfield Bank FSB is also fairly new on my list. My first post was last May. One advantage of this bank is that they are listed on CheckingFinder which allows you to apply online.
Other High-Yield Reward Checking Accounts
There are still some reward checking accounts that pay over 5% APY on balances up to $25K. There's even one that still pays 6.01% APY. However, you'll have to live near one of these institutions to qualify. You can find these in your state at the reward checking section of DepositAccounts.com. The "Filter Accounts" button allows you to customize the table for your state and for the amount you intend to deposit.