When ABC News described how you could find checking accounts that pay 4% at DepositAccounts.com, it attracted quite a number of new visitors. I thought it would be useful to describe the account that pays 4% along with the limitations and requirements. Also, I thought it would be useful to list some alternatives. First, it’s important to understand the basic requirements and limitations of reward checking accounts.
Requirements to Receive High Interest Rate
High-interest reward checking accounts reward account holders with high interest rate when the account holders meet certain monthly requirements. Most all require a certain number of debit card purchases (average between 10 and 15). Direct deposit is also often required, but other ACH deposits or withdrawals will usually satisfy this. Receiving e-statements rather than paper statements is another common requirement. I have more details of these requirements in this article.
Most all reward checking accounts limit how much of your balance can qualify for the high interest rate. Your balance up to this cap will earn the top interest rate. The portion of your balance over this cap will typically earn a much smaller interest rate. Some examples of balance caps include $10K, $15K, $20K and $25K. The interest rate becomes less important as the balance cap goes down.
Many of the best reward checking accounts are at credit unions. Unlike banks, credit unions have fields of membership (FOMs) which limit who can join. However, there are dozens of credit unions which allow anyone in the country to join. This usually requires joining an association which is in the credit union’s FOM. Sometimes there’s a small fee to join the association, but once you’re a credit union member, you don’t have to maintain your association membership. Some credit unions make it easy to join with an online application that allows you to join the association at the same time you join the credit union. However, in some cases you’ll have to join the association on your own before you apply for credit union membership. I have more details on these all-access credit unions in this article.
Top Nationally Available Reward Checking Accounts
You can view all of these in our reward checking account table. If you prefer to open an account at a local bank or credit union, you may not have many reward checking accounts available. If there are some available in your area, the rates and balance caps may be low. There are a few areas of the country that have some great reward checking accounts, but these are not the norm. If you don’t mind opening accounts online or by mail, you’ll have more options. There are a few dozen reward checking accounts that are nationally available. These are offered by small institutions so it’s likely that you won’t live near a branch. You’ll have to open the account online and/or by mail.
I thought it would be useful to highlight the top nationally available reward checking accounts based on the balance cap. As you can see, the larger balance cap, the smaller the interest rate.
Please note that both the interest rates and the balance caps are subject to change. These rates are accurate as of 7/19/2013.
- Great Lakes Credit Union’s Ultimate Checking account pays 4.00% APY on balances up to $10,000. You can view the monthly requirements of the account and how to join the credit union in my account and credit union review. There’s an online application with a qualification option that allows most everyone to join.
- INOVA Federal Credit Union’s Ovation Checking account pays 3.00% APY on balances up to $20,000. You can view the monthly requirements of the account and how to join the credit union in my account and credit union review. There’s an online application that allows you to join the association which qualifies you for credit union membership. Readers have reported that there’s an additional one-time fee of $10 for joining the credit union.
- ABCO Federal Credit Union’s Premiere Checking account pays 2.02% APY on balances up to $25,000. You can view the monthly requirements of the account and how to join the credit union in my account and credit union review. Unlike the other two credit unions, joining the credit union requires mailing the application.
- BofI Federal Bank through its affinity groups offers Rewards Checking accounts that pay 1.50% APY on balances up to $150,000. Unlike the above institutions, this is a bank and not a credit union. However, to qualify for this rate, it’s expected that you’re a member of an affinity group. One of the affinity groups is the the American Senior Association, and anyone can join this association for $15. If you don’t want to go through an affinity group, you can open this Rewards Checking account directly at BofI Federal Bank’s division Bank of Internet USA. However, this Rewards Checking accounts pays only 1.25% APY. This rate has held for over two years. I have more details about these accounts in my BofI Federal Bank Rewards Checking review.
As I mentioned above, if you’re lucky you may be able to get higher rates and larger balance caps in your local area. You can find these by using our reward checking account table. To learn how to limit the accounts to just your state and how to select the balance cap, please refer to my guide on using the rate tables.