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NorthPointe Notifies Customers of New Ultimate Checking Requirement

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Last month I described two important changes that took effect on Northpointe Bank’s reward checking account, called the UltimateAccount. The first was a balance cap increase from $5k to $10k. Now balances up to $10k can earn a 5% APY, making this the nation’s highest-rate reward checking account for a $10k balance. The other change was that it no longer required debit card purchases to total at least $500 for the statement period. Now, the only debit card usage requirement is that 15 debit card purchases must be made each cycle to qualify for the high rate. However, a new debit card usage requirement is being added. A reader forwarded me an email he received from Northpointe Bank which describes the new requirement that is scheduled to take effect in July. Below is a copy of this email:

Effective Monday, July 17, 2017, the following updates take effect on all Northpointe Bank Ultimate Checking Accounts:

Purpose and Expected Use of Ultimate Checking Account

The Ultimate Checking account is intended to be the accountholder’s primary checking account in which payroll transactions and day-to-day spending activities including but not limited to grocery, gasoline, apparel, shopping, dining, sporting and entertainment transactions are posted and settled. We expect the account’s debit card to be used frequently throughout each month and for transaction amounts to reflect a wide dollar range. Small debit card transactions conducted on the same day at a single merchant and/or multiple transactions made during a condensed period of time, particularly near the end of a statement cycle are not considered normal, day-to-day spending behavior. These types of behaviors appear to be conducted with the sole purposes of qualifying for the account’s rewards, and thus will be deemed inappropriate transactions and will not count towards earning the account’s rewards.

Northpointe Bank reserves the right to determine if the account is being maintained for a purpose other than primary, day-to-day use. Accountholders who persist in making debit card transactions in a calculated and limited fashion in order to meet their monthly qualifications may have their account converted to a different checking account or closed altogether. We also reserve the right to convert the account to a different checking account if the Ultimate Checking account does not have consistent, active use of three (3) consecutive statement cycles.

We have the right to close this account at any time, with proper notice. Our decision to close the account will not affect your existing obligations to us, including any obligations to pay fees or charges incurred prior to termination. No deposits will be accepted and no checks will be paid after the account is closed. Upon termination of your Ultimate Checking account, any optional add-on products or services associated with this account will also be terminated at the same time.

These changes affect only a small number of clients but ensure we can continue to offer the great rates and value you’ve come to expect from us. Please contact us with any questions at (888) 672-5626 or support@northpointe.com. Thank you for banking with us.

Many thanks to the reader who forwarded me this email.

These warnings from banks were common in the early days of reward checking. I first posted on these warnings in 2008. Banks hope that the average customer of their reward checking accounts will make many hundreds of dollars in debit card purchases each month. For each debit card purchase, the bank receives around 1% to 2% in fees from the merchant. These are called interchange fees. If the customer only makes small purchases, the bank won’t earn much in interchange fees, and that will impact the bank’s profits.

To qualify for the high rate, Northpointe Bank used to require account holders to have debit card purchases that total at least $500 per month. That’s a straightforward requirement that ensures the bank receives enough interchange fees to allow them to pay the high interest rate. Why did Northpointe remove this $500 requirement? I know the company behind Kasasa accounts (Kasasa, LTD) has maintained that federal regulations prohibit banks from requiring that transactions be of a certain dollar value (individually or in aggregate). I’ve seen this explained in an FDIC Bulletin. If a bank decides that it’s not allowed to place dollar requirements on debit card purchases, the bank may feel it’s necessary to issue the above warning to discourage customers from making multiple small purchases.

Even with this new requirement, the UltimateAccount remains a good deal. Being able to earn 5% on balances of up to $10k results in $500 of interest each year. That’s $370 more interest than the best savings account that’s currently available. If you have a cash-back credit card that can get 2% cash back, you’ll miss out on $2 each time you spend $100 with the debit card. So for a $10k balance, you can still make more with the UltimateAccount than a top savings account with a 2% cash-back credit card.

For more details about Northpointe Bank and its UltimateAccount, please refer to my recent review of the UltimateAccount.

Related Pages: reward checking accounts
Comments
Xuim
Xuim   |     |   Comment #1
not allowed to set a dollar limit, but they are allowed not to pay interest as long as they don't specify a limit? ("inappropriate transactions...will not count towards earning the account’s rewards") Those terms are unacceptable, in a money-printing regime not getting an interest "reward" is a real loss
Sammi Smith
Sammi Smith   |     |   Comment #2
Xuim, you are so right, it is totally unacceptable. When banks gouge people, charge outrageous fees that should be illegal and land them in jail, they now expect a pity party? When I originally talked to the bank about opening an account (shortly after they had raised the limit) the banker told me they had been flooded with applications and it would be a 2 to 3 week wait on the debit card. I decided to wait and let things settle down some and then open my account. The money this generated on this rewards checking account promotion looks good on their P&L sheet, sends their rating up higher, creates more business for them, yet their greed demands more, more, more. I find it disgusting. I realize they are in business to make a profit and they do make a profit, so why degrade themselves to stoop to a silly level? As the email said, there were only a few people who obviously aren't spending enough money using their debit card to suit them. If they are unable to take a little bad with the good, they need to revert back to their original requirements (that is, if they can - it sounds as though someone blew the whistle on them about the dollar amounts) or drop the rewards checking program altogether. There are some good credit unions and banks offering the rewards checking that don't pull silly stuff like this and they are some paying good interest. I have credit unions that pay 4.00% on 25,000.00 (15 debits) 3.50% on $25,000.00 (10 debits), so being limited to $10,000.00 (15 debits) even with 5.00% is not that great of a thing. I have a local bank paying 4.00% on $10,000.00 and I stayed away from them for almost 2 years due to the low max. balance. Northpointe needs to decide if they can play the game or not, but to come out with such an email update as they did and word it as ambiguous as they did is just ridiculous. I just never cared for rinkydink in anything, especially a bank.
RLunder
RLunder   |     |   Comment #3
Xuim and Sammi Smith,
I agree with you both 100%. I recently opened an Ultimate account at NorthPointe Bank. A week later I received the same "Update" email notice of their vague, subjective rules for Debit transactions .

I have not even received my Debit Card yet, and I am seriously thinking about closing my account, but they also charge a $10.00 fee if you close your new account in less than 120 days. That should have been my tip off that Northpointe Bank uses the 5% rate as a lure, then shuffle the deck and deal out new chicken-**** rules.

I suspect that their 5% won't last long if they start closing accounts because of their own petty greed.

Yes there are many banks and credit unions that have high interest rewards who really want your business and don't have petty rules.
111
111   |     |   Comment #4
I agree with all 3 posters above.

RLunder, a suggestion - it's been my experience that most Rewards Checking accounts do NOT charge a low-minimum balance fee. First, check whether NorthPointe does. If is does not, then you might choose to just ACH-out all but $1, and not use your account at all until the 120 days is up. Then, close it, with a letter or email indicating why.

If enough customers did this, it might send a message.
Sammi Smith
Sammi Smith   |     |   Comment #5
RLunder, 111 is correct in how RCA's normally do not charge a low-minimum balance fee. Personally, I've never known one that did, but .that's just been my experience.  FYI Northpointe does not have a min. balance for the Ultimate account, so  there you go. As soon as the interest is applied to my account, I am immediately going to ACH the entire amount out leaving a $0 balance, With lack of activity, the account will automatically close after a period of time. I'm not even going to receive a full month's interest this month (which even a full month at the max deposit of $10,000.00 is not going to be much), but they have cost me money and time and after the 1st of July I am completely done with them, they can do whatever they want with my empty account. I had set up a monthly ACH of $100.00 to be deposited in (which it has already been deposited for this month, so I met that requirement), but I have already cancelled that so it will not be going in next month. I'm just waiting until the 1st, then I'm out.of there. It was a big waste of time, but that's life. In my experience, credit unions are so much better to work with than most banks and I just need to remember that.
calwatch
calwatch   |     |   Comment #6
This is the link to read about the FDIC regulations, from a banker's perspective: https://www.bankersonline.com/forum/ubbthreads.php/topics/740232/all/reward-checking-bulletin-from-fdic
Sammi Smith
Sammi Smith   |     |   Comment #8
Calwatch, This bulletin is 10 years old and the last comment on the subject was in 2015 and consisted of asking more questions. A recent update would be far more beneficial in understanding the rules and regulations.

My question for Northpointe is why make this account available on a nationwide basis? That is knowingly inciting depositors in who are out solely for the higher interest rate. If they have received a warning from the FDIC about their $500.00 min. rate they did have in effect and therefore eliminated it, why not just downsize the program and keep it more under the radar by staying local? If this is their legal dept.'s answer to staying out of trouble with the FDIC, I'd say they were just opening another can of worms. The message is as clear as mud as to the expected response from the depositor. Ex: What is normal to one person is not normal to another. One month a person has different needs and activities in which they will spend more, then the next month their spending might take a big drop. This also applies to where the money is being spent.

I also wonder if it is legal to offer an account like this with the certain requirements attached and then be able to renege on paying the depositor the interest earned (by fulling all the requirements) by using a disclaimer that we the bank reserve the right to not fulfill our obligations to you, the depositor, because your debit card usage simply did not work out for us this month so it fell into our little basket of preconceived 'is it normal or not' area and we deemed it was not, so na na na na.

In this email to their customers they state "The Ultimate Checking account is intended to be the accountholder’s primary checking account in which payroll transactions and day-to-day spending activities including but not limited to grocery, gasoline, apparel, shopping, dining, sporting and entertainment transactions are posted and settled". (I can see them being so proud when they remembered to get the "posted and settled" part in). The thing is why would a person several states removed (let's just say TX) from MI want to have their primary checking account with a bank in Grand Rapids, MI just because of the possibility of earning around 40 bucks a month in interest? I can see it if you live in the area and do your banking with them, it makes a nice added bonus.

They state in the email they expect payroll transactions implying that to be the direct deposit requirement if you don't do the external transfer. Yet, when I opened my account and questioned this, the banker said while the DD was intended to serve as a payroll deposit, they had in fact set it up so that an ACH (of $100.00 or more) from an outside institution/bank would fulfill that obligation. He also mentioned the automated withdrawal of $100.00 would also work.. Does this scream we want this to be your primary checking account?. No, but now after receiving this email, it does scream, we want your money and then we'll deal with you however we see fit in the ongoing future. The banker also sure didn't mention the fact they charged a fee of $3.00 for their ACH's. I did not realize they did this until after this email and I read all of the disclosures and fees and this bank does like their fees, let me tell you. Nothing quite like a bank that loves to nickel and dime you to death.

I also worry that a bank like this will not have your back if something goes wrong. Say for example a thief generates a debit card with your information on it and even manages to create a new pin and use it at an ATM to withdraw several hundreds of dollars before you become aware of it, the bank will comply with their terms regarding the situation, but to go over the top and help you is something i don't see this bank as doing and that is the most important issue for me. I'm glad I found out Northpointe's true colors in this early stage. A stroke of good luck I say. Who knows how bad I could have gotten burned down the road by remaining their customer. I am lucky to have a good bank and a couple of good credit unions that I trust completely and know my money is safe with them. By safe, I mean I had the exact scenario I just described happen to me one time with one of my credit unions. Someone in CA withdrew $300.00 twice (2 separate days) for a total of $600.00 from my account at a BOA ATM machine there. I called my credit union and told them. They asked me if I had lost the card and I said no, I had it with me as I spoke to them. They immediately cancelled that card and issued me a new one and replaced the $600.00 in my account within 3 days. I have a strong feeling I would not get the same results (just betting it would be more of an ordeal) from a chintzy bank like Northpointe. No, my primary checking account stays with my local bank who also does NOT charge a stupid fee of $3.00 lol every time I ACH money out of it. Good grief.

One last thing, why are they putting these new changes in effect in the middle of July? Their monthly statement cycle runs from the 1st to the 1st so to speak, so why not set the changes in place beginning with the new cycle. Are they hoping to lure in a lot more customers with the intention of not paying them interest for their first month and resort to using this email as their excuse. I doubt very much the new customers will be informed about this going in. Are they going to change the wording in the requirement section of this account because as it stands now, it is what it says and does not contain any of these vague implications. There is nothing and I mean nothing straightforward about any of this and again, I am happy to discover this about the bank at my early stage of doing business with them.

I realize this is a lengthy post, but if it saves just one person from future grief, it is worth writing it.
alanh75
alanh75   |     |   Comment #7
I find the revised conditions for the Northpointe Ultimate Checking account to be realistic and a rational response to a minority of folks gaming the system by making fifteen debits under $1 each, in a 5 minute period to qualify for the 5% yield. The revised program does not have a negative effect upon those who make purchases as they normally would in their day to day lives. Given the choice of cancelling the accounts (which didn't take into account the concept of micro purchases in 10 minutes) or revising it to reward those who are not 'gaming the system', I think Northpointe made the best choice possible.
Sammi Smith
Sammi Smith   |     |   Comment #9
Reward checking accounts have been around for many years. Why would you say they " didn't take into account the concept of micro purchases in 10 minutes" ? There is not a single bank in the country who has ever offered RCA's or even considered the idea of doing so that is unaware of certain depositors making small debits to fulfill the requirement. To say Northpointe was unaware of it is ludicrous. Why do you think they had the $500.00 min. spending amount in their previous version? Oh, they were entirely aware of it.

I still maintain for this account to be used according to Northpointe's guidelines, it would be more effective by helping to keep their current customers and drawing new local customers who would want Northpointe to be their bank.
qnh1012
qnh1012   |     |   Comment #10
"I know the company behind Kasasa accounts (Kasasa, LTD) has maintained that federal regulations prohibit banks from requiring that transactions be of a certain dollar value (individually or in aggregate). I’ve seen this explained in an FDIC Bulletin."
How do banks like Great Lakes Credit Union ($100 min spend) and Nassau Educators FCU ($250 min spend) get away with dollar minimums?
Sammi Smith
Sammi Smith   |     |   Comment #11
Good question. I found this link https://www.ffiec.gov/%5C/consumercenter/default.aspx that may give the answer to this, but haven't had the time to check it out. When I do, I will be sure and post what I learn. Feel free to check it out and tell us what you find out if beat me to it.
qnh1012
qnh1012   |     |   Comment #12
I couldn't find the information but what I realized upon further research are that the two examples I used are Credit Unions while Northpointe is a savings bank and therefore the credit unions are not FDIC members. So far, I have not been able to find out if credit unions are subject to similar dollar spend restrictions.