Reward checking accounts continue to be a good alternative to internet savings accounts at least for small balances. If you have a large amount of money that you want to keep in a liquid account, internet savings accounts will be much easier to maintain. One exception is the rewards checking account at Bank of Internet USA. Its top rate applies to all balances. However, its top rate (1.25% APY as of 2/2/2012) is low compared to other reward checking accounts with caps from $10K to $25K. If you want to maximize the interest on your liquid accounts, the low-cap reward checking accounts are the best option.
I thought it would be useful to highlight three of the top reward checking accounts that are available nationwide. I list the rates of the top ones each week in my weekly summary. They are a little hard to compare since the balance caps range from $10K to $50K. Also, some have difficult requirements. The three that I've chosen not only have top rates, but have features that qualify them for this short list.
Please note that rates and balance caps can change quickly. Also, institutions can reduced the availability of reward checking accounts. So an account that's available nationwide may not stay that way.
Rates & Balance Caps as of 2/2/2012
- Consumers Credit Union: 4.09% APY up to $10K guaranteed to 6/30/12 - The small balance cap is a big downside to this account, but it qualified for my top list due to the high rate and the rate guarantee. My last review of this account and credit union was in October 2011. There's also a nice refer-a-friend bonus (see our promotions page)
- ABCO Federal Credit Union: 2.52% APY up to $25K - Its Premiere Checking Account has the highest rate for a $25K balance cap for the nationally available accounts with reasonable reward checking requirements. One downside is that there isn't an online application. I have more details in my ABCO FCU checking review.
- INOVA Federal Credit Union: 3.00% APY up to $20K - The Ovation Checking balance cap is close to $25K. Its monthly requirements are a little tougher than average with 15 signature-based debit card purchases required. I first reviewed this account and credit union when the top yield was 4.00% in April 2010.
There's also a question about how much to put into liquid accounts and how much to put into CDs. The above rates may be much lower in another year. I have a discussion of this topic in my post Strategy for Getting the Best Yields in Deposit Accounts.
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.
Edit 2/3/2012: Added info about Consumers CU's promotion.