The company that made popular reward checking, BancVue, has started a new campaign for Kasasa, its national brand of free checking and savings accounts. In February, CNN Money had an interesting article describing how Kasasa started in 2009 and how it's intended to help credit unions and community banks team up to fight the megabanks. This week BancVue announced plans for a national roll out of Kasasa. According to its recent press release, Kasasa accounts have "paid out more than $55 million to over 306,000 community bank and credit union account holders around the nation." Another interesting stat mentioned in the press release is that "community institutions in 39 states have committed to offer Kasasa, representing a combined total of over 750 branch locations."
I hope this campaign will be successful in expanding Kasasa and reward checking. BancVue is pushing the benefits of Kasasa for the banks and credit unions. According to this Credit Union Times article, "its accounts have bought participating financial institutions $41 million in non-interest income and added 306,000 deposit accounts to their rolls, while also helping retain existing accounts." That $41 million in non-interest income is a very interesting stat. I assume this is primarily from debit card interchange fees that merchants pay when consumers use their debit cards. That's a large percentage of the $55 million that institutions have paid out in interest to account holders. It shows how important the debit card usage requirement is in allowing the banks to pay the high interest.
The debit card fees that bank receive from merchants may help offset the costs of paying high interest rates, but it can only do so much. In today's awful interest rate environment, many institutions have more deposits than they can use for loans. That may be why we have seen so many Kasasa Cash (reward checking) accounts lower their balance caps from $25K to $10K. As an example, if an institution is offering a 3% APY, the lower balance cap reduces the annual interest paid from $750 to $300 (assuming the account holder maintains the maximum balance).
Not all institutions appear to be happy with Kasasa. First Arkansas Bank & Trust recently announced it was changing its Kasasa Cash account to what it calls a Pure Checking account, and I see FAB&T is no longer listed in the Kasasa Providers list. The growth of Kasasa hasn't been strong in my opinion. California still lacks a Kasasa provider. There's only one in Florida (First Bank which was forced to slash its rate), and there's only one in Pennsylvania (Altoona First Savings Bank). Part of the issue may be the reluctance of institutions in offering anything that pays high interest rates. That may be why Kasasa has added rewards and features that don't involve high yields such as cash back and 360.
Kasasa accounts have been useful for savers, and I look forward to seeing more banks and credit unions become Kasasa providers. Interest rates and balance caps may not have held up as well as we would have liked, but that's no different than other deposit account. All have been hit by this awful interest rate environment. One thing that hasn't changed is that Kasasa accounts remain free without monthly service charges. That makes them a good option for your local primary checking account.
To find Kasasa Cash accounts and other reward checking accounts in your area, please refer to our reward checking rate table. This can also be used to find accounts available nationwide. If you're new to these tables, my rate table guide should be useful.
If you're new to reward checking, my blog post, 10 Common Traits of High-Yield Reward Checking, should be useful.