One thing that has helped improve reward checking is the reward savings account. Some banks and credit unions now offer a reward savings account that's linked to their reward checking. The benefit is if you have savings that are above the reward checking balance cap. The savings account allows you to earn more interest on that money.
Many of these reward checking and savings accounts are under the Kasasa brand that was created by BancVue. The reward checking is called Kasasa Cash and the savings is called Kasasa Cash.
Here's an example of how the reward savings accounts typically work. Let's say you have $60K of savings. The reward checking caps the top rate to a $25K balance. Anything over that earns a much smaller balance. If you want to earn a decent interest rate for the remaining $35K of your savings, you either have to open an additional reward checking account and meet another set of monthly requirements or open an internet savings account that doesn't have rate tiers. Banks sometimes allow you to open multiple reward checking accounts, but it's becoming more common for banks to allow only one.
A reward savings account can be useful for that $35K. Some banks will offer a reward savings account with a rate that's higher than internet savings account rates. The main catch with the reward savings account is that you are required to meet the reward checking monthly requirements. If you don't, your interest rate will drop significantly.
To be useful, the reward savings account should have a yield that's at least comparable to the top internet savings accounts. In today's environment, that means it should be at least 1.25%. Also to be useful, it should have a large balance cap. I've seen a few with balance caps of only $10K.
In January I reviewed four top reward checking and savings account pairs. I've found three more that are good deals:
Rates, Balance Caps & Availability as of 4/11/2011
- Southcoast Community Bank - Reward Checking: 3.00% APY up to $35K, Reward Savings: 1.65% APY up to $35K - limited to Charleston metro area in SC
- Treynor State Bank - Kasasa Cash: 3.51% APY up to $25K, Kasasa Saver: 1.51% APY up to $25K - limited to Iowa residents
- Bank2 - Great Rate Checking: 4.01% APY up to $15K, Great Rate Savings: 2.01% APY up to $35K - limited to Oklahoma residents
Keep in mind that rates, balance caps and the availabilities are subject to change. Due to new regulations that may be taking effect this year, we may see even more reductions.
Other High-Yield Reward Checking & Savings Accounts
To find reward checking accounts in your state or to find those available nationwide, please refer to the reward checking section of DepositAccounts.com. To see if the bank also offers a reward savings account, click on the plus sign to the left of the bank name. The row expands with additional account details including other related accounts that they offer.