One downside of reward checking accounts is the balance cap. This can be a major issue for someone who has a lot of liquid savings. In today's interest rate environment, liquid savings may be increasing for many people as their CDs mature. It's hard to lock into a 5-year CD with rates under 3.00%. Many people may be choosing to roll those maturing CDs into their savings accounts. Unfortunately, savings account rates are also very low.
The only type of liquid bank account where you can find rates on par with 5-year CD rates is the reward checking account. Unlike CDs, most all reward checking accounts cap the top rate to small balances that range from $10K to $50K. The portion of the balance over the cap earns a much smaller rate. In the past, $25K was the most common cap, but that has been falling over the last year. Caps of $10K and $15K are growing in popularity.
One thing that can help with the reward checking balance cap is Kasasa Saver. This is a savings account that goes along with some reward checking accounts (aka Kasasa Cash). If you meet the monthly requirements of the Kasasa Cash, you will then qualify for the top rate in the Kasasa Saver. In the past, savings accounts had better rates than checking accounts, but reward checking has changed that. In all cases that I've seen, Kasasa Savers have lower rates than the Kasasa Cash accounts. Typically, the rates are inline with internet savings account rates. Sometimes they are a little higher. In many cases, Kasasa Savers also have low balance caps. However, there are a few which still have large balance caps.
I've reviewed several banks that offer both Kasasa Cash and Kasasa Saver accounts to identify Saver accounts that have rates higher than internet savings accounts and have large balance caps. I found a few that have these features which are widely available in major states.
Rates, Balance Caps & Availability as of 1/28/2011
- Farmer's Citizens Bank - Kasasa Cash: 3.01% APY up to $25K, Kasasa Saver: 1.76% APY all balances - All Ohio residents
- TransPecos Bank - Kasasa Cash: 3.33% APY up to $25K, Kasasa Saver: 1.75% APY up to $250K - All Texas residents
- First State Bank (Mendota) - Kasasa Cash: 3.50% APY up to $25K, Kasasa Saver: 1.50% APY on all balances - All Illinois residents
- First Bank - Kasasa Cash: 3.51% APY up to $25K, Kasasa Saver: 1.61% APY up to $25K - All Florida residents
I was a little hesitant to include First Bank in Florida since its Kasasa Saver balance cap is only $25K. I decided to include it since its high rates help make up for this.
Keep in mind that rates, balance caps and the availabilities are subject to change. Due to new regulations that will be taking effect this year, we may see even more reductions.
The latest example of a bank reducing the availability was this week at Jeff Davis Bank. Once you open an account, you typically don't have to worry about availability changes. It's rare for a bank to close accounts for out-of-market customers. However, the bank can refuse to open new accounts. So if you only have the Kasasa Cash account, they may not allow you to open the Kasasa Saver account if you're outside their market area. Several customers of First Arkansas Bank & Trust experienced that issue.
Searching for the Best Reward Checking and Savings Accounts
If you're searching for banks or credit unions which have the best Kasasa Cash and Saver accounts, you can look for the top Kasasa Saver accounts in our savings accounts table. Be sure the filter is set for your state and for your desired investment amount. Click on the bank's name to see the rates of the bank's Kasasa Cash account. If you just want to find the best reward checking accounts, you can use our reward checking account table.