In July I put together a short list of the 5 best regular checking accounts. Today I'll update that list. In addition, I'm going to focus more on interest rate. Of course if interest rate is your prime focus, you'll want a high-yield reward checking account instead. Those accounts are currently offering 2x to 4x the interest rates of regular internet checking. The main downside of reward checking is the debit card usage requirement and the low balance cap. As I mentioned yesterday, many people open multiple reward checking accounts to deal with the low cap.
I'm taking two banks off my list. Acacia Federal Savings Bank had been offering 1.50% APY on its Top Choice Checking for much of this year, but it has recently slashed this yield down to 1.00%. As I mentioned in July, it didn't have a history of high rates. The other one I'm removing is FNBO Direct's Online BillPay. This still pays a competitive 1.10% APY on all balances as of 9/22/10. For low balance checking accounts, this continues to be a competitive rate. However, for my new list I'm focusing on the best rates even if it requires a large balance.
Below is the list of the five best interest checking accounts in terms of interest rates that are available nationwide. Rates are as of 9/22/2010:
- Incredible Bank - 1.42% APY for up to $250K. I first reviewed Incredible Bank and its checking account on November 2009 when the rate was 2.02% APY. So they have been able to keep the rate competitive for a while. One downside is that they don't allow paper checks.
- Alliant Credit Union's High Rate Checking - 1.35% APY. Alliant started this checking account in January 2009 and has kept rates very competitive. It does require monthly electronic deposits and e-statements.
- EverBank's FreeNET checking - 1.26% APY $100K+ (tiered rates, 2.25% 3mo intro rate for up to $100K) EverBank has long offered competitive yields on this checking account, but it does require a large balance. However, there are no monthly fees regardless of balance for those who don't sign up for online bill pay. For online bill pay users, there's a $5K minimum balance required to avoid a $8.95/month fee. One notable feature with EverBank is their new Remove Deposit service. Please refer to my EverBank checking review for more details.
- Clear Sky Accounts's Checking - 1.25% APY $25K-$250K (1.06% under $10K, 1.15% $10K-$25K). I first reported on Clear Sky in January 2009. Both the savings account and the checking account were launched at that time, but the savings account with the high-yield guaranteed for 3 months received the most attention. Rates for both accounts have remained competitive. It's also a paperless checking account that requires the use of online bill pay instead of writing paper checks. If you're concerned with hackers breaking into your online account, Clear Sky has an extra layer of protection through the use of a secure token.
- ING Direct Electric Orange - 1.25% APY $100K+ (1.20% $50K, 0.25% under $50K) The rate is only competitive for large balances. As you would expect with ING Direct, there are no monthly fees regardless of balance. There are also no fees for overdrafts (you just pay interest on the amount borrowed). The main downside of Electric Orange is that you can't write paper checks.
If high interest is not the main concern for your checking account, Ally Bank's Interest Checking Account is hard to beat. It has the following useful features:
- No minimum balance and no monthly fees
- Free paper checks
- You can use any ATM worldwide and Ally will automatically refund ATM fees charged by other banks
- Overdraft transfer service with no fees. If you exceed your checking balance, funds will automatically be transferred from your Ally savings account to cover the transaction with no fee.
Ally Bank's interest rate may not put it on the top list, but it is competitive for regular checking accounts with a top rate of 1.05% APY for a $15K minimum balance (0.50% for under) as of 9/22/2010.
Another alternative to a checking account if a high yield is a top priority is to use a money market account. The main downside with money market accounts is that you're limited to 6 checks per month (only 3 if the bank hasn't updated its policy to the new regulation). In addition to the check writing limitation, most money market accounts lack online bill pay. If you don't write many checks and don't need online bill pay, an online money market account like what Ally Bank offers may be good enough. Its money market rate is currently 1.25% APY as of 9/22/2010.
Other High-Yield Checking Accounts
Please refer to the checking accounts section of DepositAccounts.com for both nationwide and local deals. If you don't mind using your debit card, you might want to consider reward checking accounts. We have many nationwide and local ones in the reward checking section of DepositAccounts.com.