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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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Concerns about FDIC Restricting Reward Checking Accounts


Earlier this month I received anonymous comments from readers who claimed to be from banks who said the FDIC has been sending letters to "all of the banks to cut or close or convert all reward checking accounts." I asked my contacts at BancVue about this, and they said they have seen no signs of any such letters. Below is an excerpt of the reply I received from BancVue:

We work with over 700 financial institutions across the country, and we have not received word from a single one of those institutions regarding letters from the FDIC concerning their relationship with us or issues regarding REWARDChecking or any of our other accounts. As you can imagine , should an institution receive such guidance from the FDIC, we would be the first to know about it, and there hasn't been one.

I should also point out that banks continue to come out with new reward checking accounts. Of course, rates and balance caps are lower than what they used to be, but these reward checking accounts can still be good deals when compared to checking accounts at megabanks and even when compared to checking and savings accounts at internet banks.

There have been some cases in which the FDIC has ordered banks considered 'less than well capitalized' to lower their reward checking rates. One recent case of this did affect a Florida bank. This is one reason to choose credit unions and healthy banks when choosing a reward checking account. You can find our star rating of a bank and its Texas ratio using our Bank Health Ratings page.

It should be pointed out that a bank can exceed all the required capital ratios that would qualify for a 'well capitalized' status, but if the FDIC gives the bank a consent order that includes a 'capital maintenance' provision, the bank is then classified as 'less than well capitalized'. This happened to Libertad Bank in 2009. So in addition to making sure the bank is financially healthy, it can be worthwhile to ensure there are no public enforcement actions against the bank. CalculatedRisk Blog is maintaining an "unofficial list of problem banks" that includes all public enforcement actions. I post weekly change status of this bank list. My last one was on Sunday.

If you're new to reward checking, my blog post, 10 Common Traits of High-Yield Reward Checking, should be useful.

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Snippy   |     |   Comment #1
"But I saw it on the internet, so it MUST be true!"

Thanks for checking this out, Ken. Anything is possible, of course -- but I'm inclined to give more credence to your contacts at BancVue than to anonymous commenters.

Based on the various "anonymous" comments I've seen posted to other threads here on the DepositAccounts site, it is obvious that some of those folks are convinced that there are shadowy, evil, govt. conspiracies behind everything.
rhenn   |     |   Comment #2
i agree with snippy same thing happened to me

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