Can Reward Checking Account Rates Hold Up?

The latest news from The Fed isn't good for our savings account rates. Even before the latest low-rate pledge from the Fed, rates were trending down. Most online savings account rates are now below 1.00%, and there are just a few with rates around 1.10%. We have seen similar rate trends with reward checking accounts. On the plus side, you can still get rates around 2.00% on balances up to $25K on several nationwide reward checking accounts. Also, there are many local reward checking accounts with rates around 3.00% for balances up to $25K. Even with the monthly requirements, these accounts can look more appealing than long-term CDs. However, unlike CDs, reward checking rates can fall at anytime, and they can fall substantially. So if you're thinking about choosing a reward checking account instead of a CD, make sure to keep that in mind.

I thought it would be interesting to review some of the old reward checking accounts to see how well they have held up over the years. A history of competitive rates is no guarantee of future competitive rates. Nevertheless, it can provide some insights about what changes we might see.

Rates & Balance Caps as of 1/27/2012

Connexus Credit Union: 2.00% APY up to $25K (nationwide) - I first reported on Connexus Credit Union's reward checking account in April 2007. At that time it was offering 6.01% APY for up to $25K. Rates have fallen. The last rate cut was in June 2011 when the APY fell from 2.30% to 2.00%. The reward checking account (called Xtraordinary checking) continues to be available nationwide since anyone can join the credit union via an association. Also, they provide an online application on its Xtraordinary checking page.

Provident Credit Union: 2.26% APY up to $25K (nationwide) - I first reported on Provident's reward checking account, called Super Reward Checking, in July 2007. At that time it was offering 6.01% APY for up to $25K. Rates have slowly fallen over the years. The last rate cut was in January 2011 when the APY fell from 2.51% to 2.26%. The account continues to be available nationwide since anyone can join the credit union via an association. One of the associations with easy membership is the Sierra Club.

First Arkansas Bank & Trust (FAB&T): 3.03% APY up to $25K (Arkansas only) - My first post was in late December 2007 when its reward checking account (now called Kasasa Cash) was paying 6.06% APY on all balances with nationwide availability. A few months after that, the top rate fell to 4.44% APY for up to $50K. Another change happened in 2009 when they limited new accounts to only Arkansas residents. The last rate cut was on January 2011 when the APY fell from 3.50% to 3.03%. FAB&T's Kasasa Cash is an important example with reward checking accounts. It shows reduced rates is not the only concern. Lower balance caps and reduced availability often happen.

State Bank of Toledo: 1.51% APY up to $25K (nationwide) - I first reported on its reward checking account in June 2007 when the yield was 6.01% for all balances. The lack of a balance cap and its nationwide availability made this account quite popular in 2007. It remained available nationwide, but the lack of the balance cap didn't last long. Before 2007 ended, a balance cap of $70K took effect. Both the rate and the balance cap continued to fall. The last rate cut was in May 2011 when the APY fell from 2.01% to 1.51%.

Finding the Best Reward Checking Account

If you're new to reward checking, my post on the common reward checking traits should be useful. To compare reward checking accounts based on interest rates and balance caps, you can use our reward checking rate table. Refer to this post for details on how to use the rate tables.