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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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More Banks Offering Reward Checking But Is It Still Useful for Savers?


As I reported in August, the company that started reward checking, BancVue, has been trying to expand its Kasasa brand. This is its national brand of free checking and savings accounts. One type of Kasasa account is the Kasasa Cash account which is the name of the high-yield reward checking account. In addition to attracting checking account customers, BancVue is also trying to get more community banks and credit unions to offer Kasasa accounts. That's good news for savers. The more banks and credit unions offering these accounts, the more competition there will be which should put upward pressure on deposit rates.

I regularly search BancVue's Kasasa website for any new banks and credit unions. I am finding some new ones, but one common trend with the new Kasasa Cash accounts is lower balance caps. This is the maximum balance that qualifies for the top interest rate. The portion of the balance over this cap typically earns only a small interest rate (like 0.25%). The $10K balance cap is becoming much more popular. In addition, I'm seeing $5K balance caps.

When reward checking accounts first became popular in 2007, a $25K balance cap was most common. That was large enough for many savers to make a reward checking account a good alternative to an internet savings account, at least for some of their liquid savings. With smaller balance caps, the question has to be asked again.

To decide if a reward checking account is a good alternative to an internet savings account, calculate how much more interest you can make from the reward checking account as compared to an internet savings account. That's what I did for a few cases below. I compared two reward checking accounts, one paying 3% APY and another paying 2% APY. I compared these with an internet savings account paying 1%. I then determined the extra interest earned from the reward checking account for different balance caps ranging from $5,000 to $50,000.

Extra Money from 3.00% Reward Checking Over a 1.00% Savings Account

  • $5K balance = +$100/yr or +$8/mo
  • $10K balance = +$200/yr or +$17/mo
  • $15K balance = +$300/yr or +$25/mo
  • $25K balance = +$500/yr or +$42/mo
  • $50K balance = +$1,000/yr or +$83/mo

Extra Money from 2.00% Reward Checking Over a 1.00% Savings Account

  • $5K balance = +$50/yr or +$4/mo
  • $10K balance = +$100/yr or +$8/mo
  • $15K balance = +$150/yr or +$12.5/mo
  • $25K balance = +$250/yr or +$21/mo
  • $50K balance = +$500/yr or +$42/mo

Based on these examples, you can determine if the extra money you'll get from a reward checking account makes it worthwhile. Is the extra $200 per year from a 3.00% reward checking account with a $10K balance cap worth your time? It's an extra account to worry about with monthly requirements that typically include at least 10 debit card purchases.

How much extra per month does it take for reward checking to be worthwhile for you?

Even though many reward checking accounts may not be worth it as a replacement for internet savings accounts, you may still want to make a reward checking account your primary checking account. The Kasasa Cash accounts are free checking accounts with no monthly service fees or minimum balance requirements. If you want a free checking account from your local community bank or credit union, a Kasasa Cash account is a good choice that easily beats the megabank checking accounts.

Finding the Best Reward Checking Accounts

To find the best reward checking accounts today, please refer to our reward checking rate table. This can be used to find accounts available nationwide or in your state. If you're new to these tables, my rate table guide should be useful.

If you're new to reward checking, please refer to my post 10 Common Traits of High-Yield Reward Checking.

Related Pages: checking account

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Anonymous   |     |   Comment #1
I've never understood the concept of reward checking for people that charge a significant amount a month and are displined enought to use a reward credit card and pay it off every month. For example, if you charge 1000/month on a 2 percent reward card you get back 240 a year, not including hundreds of dollars of sign up bonuses. 

Add that to the extra protection you get from a credit vs. debit card....
Anonymous   |     |   Comment #2
I don't know of any 2% reward cards.  Can you point me to one, preferably one that pays in cash every month as credit to my balance and has no annual fee?
Anonymous   |     |   Comment #3
i have a great idea..While you are charging your 2% REwards card every month, you can be earning 2.5% interest on your money while it sits in the bank waiting for you to pay off your card...
mrvirgo   |     |   Comment #4
Anon #2

American Express Blue Everyday Cash pays 3% on groceries, 2% on gas/department stores and 1% on everything else. When you accumulate $25 the amount is taken off your statement. No annual fee. I really enjoy using this card. It's amazing how fast I get the $25 dollars bonus, about every third month in my case.
Anonymous   |     |   Comment #5
Thanks for the tip, MrVirgo - but thats in essence a 1% card.  I am assuming Anon #1 meant 2% on everything, and I would further assume (or at least hope?) that it is a more widely accepted card like a Visa or MC.  Amex just isnt accepted at many places.
Interested Party
Interested Party   |     |   Comment #6
Anon #3, Please let the comunity know which account in offering 2.5% on a savings account. I will quickly sign up for this account assuming membership is available nation wide. I'm in Nor. Cal and am unable to recieve these rates outside of a Reward Checking account. I'm currently getting out of the Reward Checking account that I am in because they sank the Reward rate down to .85% and that's with meeting all of the requirements.

Constantly Looking for Returns

Interested Party
51hh   |     |   Comment #9
(3.5%, $25K) is my threshold to use RCAs.  While I am not abusing RCAs with $1 debit transactions, I am certainly not charging hundreds on debit cards. 

I have several all-2% cards (e.g., Fidelity 529 card) and 5% card for everyday purchases (gas, grocery, and drugstore); e.g., Amex Blue Cash preferred with 6% CB on grocery and HSBC card with 5% CB on G/D/D.  Most of the above cards are grandfathered except for the Amex 6% grocery card. 
Anonymous   |     |   Comment #10
I have an American Express Blue and I don't get to those levels until I charge large amounts.  I currently have a BOA card.  I get 3% gas, 2% Supermarket and 1% for everthing else.  No spending levels to hit.  When I get to $25  they send the funds to my Savings account.  I use my PenFEd card for gas which is 5%.  I do not carry balances.
Anonymous   |     |   Comment #11
Anon 8 - that is not technically a 2% card, because it pays out in points rather than cash

But thanks for pointing it out anyway
bbug   |     |   Comment #12
The Fidelity Investment Rewards Amex pays 2% on all purchases and has no annual fee. The reward balances are automatically transferred to your Fidelity checking or other designated account when they reach $50.

The downside is thet a Fidelity account is probably required.
Anonymous   |     |   Comment #14
#12 - you can open a Fidelity account for free. No big deal and no minimum balance.

PenFed has a new card offering 5% on gas, but we'll see for how long.
bbug   |     |   Comment #15


I do have a Fidelity account and use my Amex for all purchases other than gas, supermarkets and drug stores, for which I use another free card (no longer available) that pays 5% on those items.
Anonymous   |     |   Comment #13
I keep right around $10,000 in my Kasasa account and get about $25 a month. But I also get ATM fees back, which for me is right around $10 a month, which I'd probably spend anyway. That's ~$35 x 12 = $420 bucks per year. Sure, I'll use my debit card 10 times this month. No big deal. 
Anonymous   |     |   Comment #16
Watch out for that Fidelity 2% reward card. As soon as I received my card I started getting hit with automated tele-marketing calls. I complained to a rep, and then a mgr, and was told they would take my name and number off the calling list, but it may take up to 30 days to go into effect. Since I had a valid complaint, I demanded they stop the calls without delay. They  said they couldn't do that, so I told the mgr to cancell the card.  Guess what happened? There were no more calls. I don't know whether or not the card has been cancelled, but I'm not using it.

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