10 Years of High-Yield Reward Checking

I’ve been reporting on high-yield reward checking accounts for 10 years now. I thought this would be a good time to mark this milestone.

Time sure has gone by fast, I started blogging on bank deals in 2005, and in 2006, I began coming across high-yield checking accounts from community banks and credit unions that had a catch: the high-yield had some activity requirements. Debit card usage was the main one that required some effort (see my reward checking overview for more details of the activity requirements). For savers who wanted to maximize interest without locking it into a CD, these seemed like a good deal. In many cases the yields were higher than the best internet savings accounts.

When I first began reporting on these reward checking accounts, there was some concern that these were just gimmicks that wouldn’t last. After 10 years, it’s safe to say they did last. As of August 2016, we list 926 accounts in our reward checking account table. These accounts are offered by banks and credit unions in all parts of the country.

The zero-interest rate policy (ZIRP) forced internet savings account rates to plummet from 5% to around 1%. The rate environment did impact reward checking, but for many cases, reward checking has continued to offer savers an alternative to internet savings accounts. For the last 10 years, it has been fairly easy to find reward checking accounts with rates of at least 100 bps over the best internet savings account rates.

ZIRP impacted reward checking in a way that we didn’t see with internet savings accounts. In addition to rate cuts, banks reduced the balance caps of their reward checking accounts. The cap is the maximum balance that qualifies for the high yield. The portion of the balance over this cap earns a much smaller interest rate. Back in 2006 and 2007, some banks were offering high yields for all balances of the reward checking accounts. As we entered into ZIRP, the reward checking balance cap became more common with $25,000 being the most common cap. Now, the $10,000 cap seems to be the most common.

If you were one of the early adopters of reward checking, you have probably seen more than just cuts to rates and balance caps. Reward checking didn’t thrive at all banks and credit unions. Some banks and credit unions have ended them which has been common after an acquisition or merger.

An even more common occurrence has been banks that have changed who is eligible to open an account. Several banks launched their reward checking with online applications that allowed people from any state to apply. These often didn’t last, and that was especially case for the better reward checking deals. It was common to see banks reduce the geographic eligibility to just their state or local market area.

Banks have also occasionally added requirements. One typical added requirement was to use the account as one’s “primary checking account” without most debit card purchases being very small amounts.

Instead of writing one large 10-year anniversary post, I plan on writing a series of posts reviewing the last 10 years of reward checking and looking to see what the future holds for reward checking.

Overview of Reward Checking & Our Reward Checking Table

In addition to this post, I’ve also written a post to provide an overview of reward checking. In addition to the basic overview, it shows how you can use our reward checking account table to find the best reward checking accounts available nationwide and in your local area.

Poll: How Many Reward Checking Accounts Have You Opened?

Have you opened a high-yield reward checking account in the last 10 years? If yes, how many have you opened? Please let us know by taking this poll. Also, if you have anything else to add about your experiences with reward checking over the last 10 years, please leave a comment.

I have a lot more to share on reward checking. Please stay tuned for future articles in this 10 years of reward checking series.