Over the last three years, reward checking account rates have held up better than internet savings account rates. However, rates have continued to fall, and we have seen many recent rate cuts on reward checking accounts. Rate cuts are not the only thing to worry about on reward checking accounts. Banks have also reduced the amount of interest they pay by reducing the balance caps.
Not all reward checking accounts have been hit with rate and balance cap cuts. There are still several reward checking accounts around the nation with rates over 4.00% APY for balances up to $25K, but these are not nationwide deals.
For nationwide reward checking accounts, we're down to just Danversbank as the only bank offering at least 3% APY for balances up to $25K. Coulee Bank was in this group, but it just recently restricted new accounts to residents of Wisconsin, Minnesota and Iowa.
So if you want a 4.00% reward checking account (for balances up to at least $25K), you'll have to look for local deals. You can find those in your area by using our reward checking table.
Many of the best reward checking accounts are in low populated areas. However, there are a few that are in large metro areas. I reviewed some of these in January. I thought it would be useful to review these again to see how they have held up in the last three months.
Rates, Balance Caps & Availability Accurate as of 4/4/2011
Recent Rate and/or Balance Cap Cuts
- Southern Bank's Kasasa Cash account pays 5.01% APY on balances up to $15K (down from $25K). My first post was in October 2008 when the yield was 6.01%. It continues to be available to residents of Missouri and Arkansas via an online application.
- Nassau Educators FCU's Go Green Checking had its first rate cut since my first review in December 2008. The top rate is now 3.50% APY (down from 4.00%) on balances up to $25K. Membership is open to anyone who resides in the large New York counties of Nassau and Suffolk.
- Bank of Nebraska's Investment Checking also had a large rate cut with a new top rate of 3.04% APY (down from 4.07%) on balances up to $25K. My first post was last November. Branches are located in the Omaha metro area.
- First Bank's Kasasa Cash account had a large rate cut bringing down the top rate from 3.51% to 2.51% APY for balances up to $25K. My first post on this account was June 2009. The bank has an online application, and it's open to all Florida residents.
Rates and Balance Caps are Holding
- Golden Plains Credit Union kept its yield at 6.01% longer than any other institution. It fell to 4.44% APY for balances up to $25K in September 2010. My first post on this account was in April 2008. It's available to Central and West Kansas.
- FAA Credit Union's Optimum Checking continues continues to pay 4.10% APY on balances up to $30K. My first post on this account was in March 2008. The credit union is open everyone in the Oklahoma City metro area.
- Commercial Bank and Trust's Choice Checking continues to pay 4.09% APY on balances up to $25K. This account doesn't have much history. My first post was last December. The bank has branches in Memphis and a few other Tennessee cities.
- 1st Commonwealth Bank of Virginia's reward checking account continues to pay 4.01% APY on balances of up to $25K. My first post on this account was in January 2010. The account is available to anyone in the Washington DC metro area. A branch visit to its Arlington office is required to open an account.
- ViewPoint Bank continues to pay 4.00% APY on balances up to $25K. And it's still available to all Texas residents. In 2010 the cap had been $50K, and it used to be available nationwide. As I described in June, ViewPoint doesn't make it easy to apply, and this has angered many readers.
Future of Reward Checking?
The ultra-low interest rate environment is not the only reason for rate cuts. The potential effects of the Fed's debit card interchange regulation may already be having an influence. A lot of the high interest rates of reward checking accounts depend on debit card interchange fees that retailers pay.
As described in this Forbes blog post, there's a chance that this regulation could be delayed depending on the passage of bills in the Senate and the House. If you want to encourage your Senator or House representative to vote to delay the regulation implementation, there's an online take action form that makes it easy to send a message.
Even if the regulation isn't delayed, reward checking may still survive since the regulation is suppose to only affect institutions with assets over $10 billion. However, as mentioned in the Forbes post, many smaller institutions still think the regulation will reduce their interchange fee revenue. If that happens, reward checking will very likely be affected.