For high-yield reward checking accounts, most of the focus has been on the top rates. The rates that apply to balances over the balance caps are often overlooked. When many of the banks began offering these in 2007, the second-tier rate was often 1.01% APY. This seemed very low when you could easily get over 4.00% APY at internet savings accounts. However, in today's interest rate environment, this compares favorably to many of the popular internet savings accounts. For example, Ally Bank's savings account currently pays 1.09% APY. So if your reward checking account balance goes above $25K, you're not losing out on much.
Just like the top rates, we have also seen cuts to many of these second-tier rates. So the 1.01% yield for the portion of the balances over $25K is now rare. You can look for these in our reward checking account table by clicking on the "filter accounts" button and increasing the investment amount. The APY column will show the yield in effect for that investment amount. So if you include an investment amount of $30K, The APYs will be the second-tier yields for accounts with $25K balance caps. The column for the 1st year estimated earnings will combine the earnings from the first $25K and the earnings from the portion of the balance above $25K.
If you specify a search for only nationwide reward checking accounts with an investment account balance of $30,000, the first four banks as of 12/13/2010 should be the four banks that are still offering around 3% APY for the first $25K. These include:
Liberty Bank is on top since its second-tier rate is currently 1.01% APY. The second-tier rates of the others are much lower (0.30% and below).
If you think there will be times in which you'll have over $25K in your reward checking account, Liberty Bank will have an advantage. These second-tier rates are another factor to keep in mind if you're looking for a new reward checking account.