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About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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The Best Reward Checking Accounts in the Nation


The best reward checking accounts that are still available have at least a 4.00% APY for balances up to at least $25,000. There are still several that meet this criteria, but they are all local deals. Those that are available nationwide have much lower rates and/or balance caps. Earlier this month, I reviewed the remaining nationwide reward checking accounts.

I thought it would be interesting to review these 4-percent reward checking accounts. The number of accounts in this group will probably be shrinking in the coming months due to the upcoming Federal Reserve regulation on debit interchange fees. Last week the Senate failed to pass legislation which would have delayed this regulation for up to a year. There's a little bit of hope that the regulation may be delayed from TCF Bank's lawsuit, but the chance of that happening is slim. The regulation is scheduled to take effect on July 21st, but since the Fed was late in publishing the final rules, it's possible that it could be delayed by a couple of months.

Even when the debit card interchange fee regulation takes effect, its impact to reward checking may not be known for a while. The regulation exempts institutions with assets under $10 billion, and the vast majority of reward checking accounts are from banks and credit unions with less than $10 billion in assets. However, community banks and credit unions were never convinced that this exemption would protect them. I explained some reasons for this doubt in my last week post. Even if the small bank exemption doesn't work, it seems likely that the revenue impact will take a while to hit small banks. However, the expectation of the future revenue impact could prompt banks to start cutting back on their reward checking accounts. We'll have to wait and see how it plays out.

The Top 30 Reward Checking Accounts in the Nation

Our reward checking table can be configured to show the highest rates for balances of at least $25K for all states. This currently shows 30 accounts with at least a 4.00% APY for balances of at least $25K. There's at least one that will be off this list in July. It was reported yesterday that Northstar Bank of Texas will be cutting its rate from 4.01% to 3.01% APY on July 15th.

The table below shows the states where the banks and credit unions that are offering these reward checking accounts are located. Some of the banks and credit unions have branches in multiple states. For simplicity, I only counted the state of the headquarters. Most of the multiple-state credit unions are ones with field of memberships based on select employer groups. These include Market USA FCU and Southwest Airlines FCU.

Many large states don't have any of these top reward checking accounts. These include California, Florida, New York, Michigan and Georgia. The two states that have the most of these are Texas and Illinois. Texas is on top. Texas is also the only state where a bank offers a top reward checking account statewide. It's ViewPoint Bank, and it used to offer its account nationwide.

Most of these banks and credit unions are outside of the big cities. So even if your state has one or more of these accounts, you may still not be able to open one. Perhaps in the big cities the banks and credit unions experience too much demand for these accounts from savers who bring in large deposits.

Out of the 30 reward checking accounts, 18 are from banks and 12 are from credit unions.

Only 4 of these 30 have balance caps over $25K. Three have $30K caps and one has a $50K cap. The one with the $50K cap is Market USA FCU that's based in Maryland with branches in South Carolina and Massachusetts. Unfortunately, its field of membership is based on select employer groups.

At least eight of these 30 accounts have been around since 2008. So that's a good sign that the banks and credit unions have been able to keep the accounts profitable. Hopefully, they won't be quick to over react when the new interchange fee regulation takes effect.

# State # of Top Reward Chk Accts
1 TX 6 ******
2 IL 4 ****
3 IA 3 ***
4 KS 3 ***
5 KY 2 **
6 MN 2 **
7 OK 2 **
8 AR 1 *
9 CO 1 *
10 LA 1 *
11 MD 1 *
12 MO 1 *
13 NC 1 *
14 OH 1 *
15 PA 1 *

If you're new to reward checking, my post on the 10 common traits of high-yield reward checking accounts should be useful. To review reward checking accounts, you can use our reward checking account table. Use the "Filter Accounts" button on top of the table to select either nationwide accounts and/or your state. Also, you can use this button to select the investment amount. This allows you to compare accounts with different rate tiers.

Related Pages: checking account

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eric2   |     |   Comment #1
I hate to sound pessimistic but to me it is a question only of IF (not WHEN) these accounts, too, will fall to lower interest rates.

Currently, I have one of these 4% accounts and I also have two others grandfathered in (used to be nationwide but not anymore) that pay 3.25% up to 25K.

However, I have made a decision that if I cannot get at least 3% on a rewards checking account, I am not going to use it. I don't care how low interest rates go on other products...once we go below that line, the hassle is no longer worth it to me. Sadly, I fear that time may be by the end of 2011, especially in light of the fact that it seems nobody is expecting much in the way of interest rate increases in the next year.

I guess my one consolation is that the rate on my adjustable mortgage should stay ridiculously low for the next year or two as well.
eric2   |     |   Comment #2
Oops. I forgot to proofread. First sentence should say WHEN (not IF) instead of vice versa.
adityanm   |     |   Comment #3
I am not sure if the availability of more RCAs in TX compensates for my having to live in a state with most regressive politicians and churches.
Mike   |     |   Comment #4
#3, you may want to check Texas stats for economy and business.  Texas is about the best thing America has goin for it , right now.  They may be cowboys.  They aren't dumb.

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