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As Rates Fall, the Appeal of High-Yield Reward Checking Grows

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After yesterday’s Fed rate cut (the third since July), I’m afraid savers should expect more rate cuts on their online savings accounts. As those rates fall, high-yield reward checking accounts are looking more attractive as an alternative for your liquid funds. There are still options to earn 2.40% on savings accounts, but as those rates fall, the 3%+ rates currently available on reward checking accounts will become more appealing.

Below is a table of reward checking accounts that currently earn at least 3.00% APY on balances of at least $25k. All are currently nationally available. For a full list of high-yield reward checking accounts including Kasasa Cash Accounts, please refer to our reward checking table.

APYMINMAXINSTITUTIONPRODUCTDETAILS
4.00*%-$30kOrion Federal Credit UnionPremium Checking
OTHER TIERS: 0.05% $30k+
4.00*%-$50kTAB BankKasasa Cash Checking
OTHER TIERS: 0.25% $50k+
3.33*%-$25kHeritage BankeCentive Account
OTHER TIERS: 0.15% $25k+
3.25*%-$30kDover Federal Credit UnionKasasa Cash
OTHER TIERS: 0.25% $30k+
3.00*%-$30kMain Street Bank (MI)Free Kasasa Cash Checking
OTHER TIERS: 0.25% $30k+
Rates as of November 14, 2019.

As of 10/31/2019, TAB Bank offers the highest rate. Its Kasasa Cash Account earns 4.00% APY for balances up to $50k when monthly qualifications are met. The rate and balance cap have held up since we began tracking this account in April of this year.

For savers looking to maximize interest, there’s more to consider than just the rate of a reward checking account. You have to make sure the monthly activity requirements to qualify for the high rate are not too difficult. Also, you have to make sure the balance that qualifies for the top rate (the cap) is high enough to be worth your time. A reward checking account with a 4% APY may not be worthwhile if the cap is only $5k. Such a cap will limit your annual interest to about $200. On the other hand, a 4% APY may be worthwhile if the cap is $50k. That increases your annual earnings to at least $2,000.

Another thing to consider with reward checking is that both the rates and the caps can fall. We’ve seen this since I began reporting on reward checking in 2006. In 2007 I reported on reward checking accounts with yields over 6% without balance caps. As rates started to fall, banks lowered reward checking rates and introduced balance caps. For example, First Arkansas Bank and Trust offered a reward checking account in 2007 with a 6.06% APY on all balances. In 2008, the yield fell to 4.44% and a balance cap was introduced that limited the 4.44% to balances of up to $50k. Both the yield and the cap continued to fall as interest rates fell. In 2009, the bank stopped accepting out-of-state applications.

Even though reward checking rates and caps should be expected to fall when interest rates fall, reward checking accounts have shown the ability to offer higher rates than online savings accounts over the long run. For example, in October 2014 when the federal funds rate was still near zero, the top reward checking yield for balances up to at least $25k was 1.76% (at ABCO FCU). The top yield on an online savings account was 1.25% (at UFB Direct). This required a $25k minimum balance. The top yield on a no-minimum online savings account was 1.05% (at MySavingsDirect). Ally Bank’s Online Savings account had a 0.90% APY at that time.

Are you using a reward checking account as an alternative to online savings accounts? How long have you had reward checking accounts? And what rates and balance caps do you require?

Related Pages: reward checking accounts, nationwide deals
Comments
RichReg
RichReg   |     |   Comment #2
First Foundation is now the leader....but who knows if that will last either?
https://firstfoundationinc.com/personal-banking/bank/online-savings
DanR
DanR   |     |   Comment #3
Unless I'm missing something, Mutual Bank at 2.44% is still higher...

https://www.mymutualbank.com/leader-money-market
#4 - This comment has been removed for violating our comment policy.
Watcher
Watcher   |     |   Comment #5
@DanR I highly doubt this rate is in existence. Here is their disclosure for the Leader MM - I will bet you it is an old page that they forgot to refresh and this account does not even show up as one of their products on the main page.

"Your rate is refreshed to match the Fed Funds Rate on the 15th of every month."

"DISCLOSURE

*Annual Percentage Yield accurate as of 4/24/19. 2.44% APY on balances up to $250,000."
RichReg
RichReg   |     |   Comment #10
Right on, Watcher. A rep @ Mutual just confirmed that the 'Leader' Money Market ended months ago. Can't even navigate to that page from their main website which, evidently, is being removed anyway due to their merger with North Easton Savings. Prolly why they didn't care about correcting it...
bwrensch
bwrensch   |     |   Comment #23
TAB Reward Checking requires at least $5 per transaction to count towards the 15 transactions required each month.
willy12
willy12   |     |   Comment #6
Speaking of RCAs, I tried to use one of my RCA debit cards to add funds at Amazon to my gift card balance. It showed a limit of .50 so I tried 50 cents. Twice it said the payment failed. The 2nd time it made me re enter the card info which I was sure I entered correctly but it still failed.

Cold weather hit tonight where I live. At 7 am it was 72, it was 48 a few hours later and now 39.

Not good weather to be knocking out RCA transactions at gas pumps.

Because of the Marcus deal, I have not used my 2nd account in a few months but will start back soon.

I have 2 at Heritage. Probably not going to bother with another new RCA for now but maybe in early Dec when a CD matures.
willy12
willy12   |     |   Comment #18
I tried again at Amazon, this time, I got both cards on there and my payments were accepted. I knocked out over a dozen in a row between 2 accounts which finishes me for the month. Each at .50 cents each. This is by far the easiest method I have ever done. No more small gas station transactions for me.
Cracker
Cracker   |     |   Comment #7
They're more work than they're worth. I can get a better return using rewards credit cards. I have a Capital One Savor One card which pays 3% back on restaurant purchases and a card from Bank of America which pays 3% back on all online purchases. The rewards checking accounts also have balance caps on the amount which can earn the higher rate and most require 10 or more signature debit transactions per month to qualify. Too much work and if you **** up, you're out the money for that month.
#8 - This comment has been removed for violating our comment policy.
Bob
Bob   |     |   Comment #14
3% on rewards card is not the same. You would have to buy 25K and upwards to get a similar amount of cashback.
Sue
Sue   |     |   Comment #11
Any RCA with interest rate of 2-3% is not cost effective, waste of time running around to fulfill the requirement. Get reward CC for 1-3% on all purchase and relax.
verblic
verblic   |     |   Comment #12
which is why most people put all spending on a credit card while only doing tiny transactions on the rewards checking. But I'll agree it's a waste of time with the Fed on a mission to destroy all savings. When rewards checking first came out they paid 6% like savings accounts used to, now it won't be long until they are a 0% alternative to savings accounts hit with negative rates. The only way to win is not to play
Bob
Bob   |     |   Comment #15
So essentially a free $1600 on 40K is a waste of time? Reward cards are great but you would have spend a ridiculous amount to match RCA.
Predatory Depositor
Predatory Depositor   |     |   Comment #27
If an RCA is paying 4% on $40,000, you're not getting a "free" $1,600.

Your profit is the difference between 4% and the percentage you can get without the RCA in a similar liquid account.

So in other words, if you're currently getting 2.5% in your Northern Bank account, for example, your profit is only 1.5%, or $600 a year, $50 a month.

So the question becomes, is it worth the effort for $50 a month. I think it's a slam dunk that it's better than 12,500 steps a day every day for most people, but beyond that it's a personal judgment.
51hh
51hh   |     |   Comment #16
There are ways to do debit card transactions of RCAs without wasting any cash back on credit cards; just needs to design innovatively; and reap full benefits on both.
moneysaver
moneysaver   |     |   Comment #26
I have no trouble meeting the monthly requirements of multiple RCA accounts each and every month, and I don't go out of my way one little bit to do so. Just use my RCA debit cards for all my routine purchases during the month and pretty much never use cash -- restaurants, fast food, grocery shopping, drug stores, gas stations, Amazon purchases and other online shopping, etc etc.

I only use credit cards for very large ticket items where my cash back card features make sense. And I don't use cash for almost anything. And it's worked out just fine for years now, and typically nets me about $150 per month in interest earnings from my 3 active RCA accounts.
And I NEVER have the need to try to cheat the RCA system by resorting to serial 50 cent or $1 gift card top ups or gas purchases -- which are the kind of behaviors that cause banks to impose minimum purchase requirements and similar measures against people not willing to use the cards as intended.
kcfield
kcfield   |     |   Comment #13
It is not just a matter of comparative yields. Before someone decides to use high interest checking in lieu of a CD or savings account, they should be sure that they have the discipline: a) not to touch the principal they intend to save; and b) to add to this principal amount over time (as they would have done with a traditional CD or savings account). The easy liquidity of checking accounts makes it easy to spend more than intended.
willy12
willy12   |     |   Comment #17
RCAs ARE worth the time.

Here is the math... using my Heritage details.

Interest difference on $25k using 3.33% versus 2.50% is an extra $207.50 per year. $17.29 per month.

But wait, you could have earned 2% on $10 per month so you must deduct the $2.40 per year or .20 per month.

Net gain over & above normal savings rate= $205.10 per year or $17.09 per month.

The easiest transactions are 10 $1 payments to a regular bill that accepts card payments and does not charge a premium. For me, its AT&T, and Natural gas.

You also have to do an ACH out which can be automatically pulled from an outside account for the amount of the monthly interest less the $10 you spent to meet the qualifications. You will want to do this anyway because you do not get a good rate on amounts over $25k

All of the above can be done in a few minutes per month.

And, when the 2.50% rate at Northern goes down as it probably will after the first of the year, the "earnings" for having the RCA will be greater.

Is your time so valuable that you can't be bothered with a few minutes every month for $17? Then by all means, don't bother.
Nothing but twine
Nothing but twine   |     |   Comment #19
willy12 RCA's only work for small amounts. If you have 4 Northern accounts maxed out for FDIC then your method is useless. I would have to open well over 20 RCA's to accomplish your returns not to mention all the work you outlined above. It is a lot easier to sign up with IBD and follow their methods with a small brokerage account that will put to bed any returns made from RCA's plus the sub will be paid for.
willy12
willy12   |     |   Comment #20
I buy mid term CDs with the bulk of my money. My RCA money is my only liquid funds. $50k is plenty. But, I might go for a 3rd next month?
deplorable 1
deplorable 1   |     |   Comment #21
I don't do RCA's but I can certainly see the benefit of doing small required transactions to earn a better rate on liquid cash. I basically do the same thing in a different way. By using 0% no fee balance transfers. Say I have $50,000 liquid earning 2.5% in a MMA but I then borrow another $50,000 at 0% which also earns 2.5% I have basically boosted the rate on my $50,000 to 5%. Even better if I can find a 3-5% short term CD. This only requires one minimum payment per month which is much less work than several transactions. Obviously the 0% no fee deals need to be available, you need to have large credit lines and a good score to pull this off. Anyone can do the RCA's without all that advanced preparation so it makes sense as long as large purchases are not required.
willy12
willy12   |     |   Comment #24
Another benefit too is you don't have to worry about accidentally going over the 6 per month limit or savings or money market accounts.

The last few months, I have continued to use one off my RCAs despite only having about $12k in there. (The rest went to the Marcus deal which ends soon)
deplorable 1
deplorable 1   |     |   Comment #33
That's why I use corporate debt accounts as checking accounts for paying bills Willy. That 6 withdrawal per month limit is a real deal killer for me with all the credit card payments I make each month.
Predatory Depositor
Predatory Depositor   |     |   Comment #31
dp1
Regarding the 0% no fee balance transfers...

Can you explain the details of how that offer is related to borrowing funds at a 0% rate?

Is it that after you transfer the balance to the new card you can get a cash advance on that card at a 0% rate for a certain period of time? Then at the end of that period, when the 0% expires you pay it back with the funds that you had invested in a liquid account?

I assume that's what you're referring to but want to confirm that's what you mean, I'm curious.

I'm also curious what that does to your credit score since for most people, that would be maxing out their credit usage which is one of the major factors that hits credit score. That could prevent you from getting future zero percent balance transfer offers and repeating the process since those offers are typically only available to high credit score applicants.

Does your credit score bounce back right away to where it was when you pay the card back?
deplorable 1
deplorable 1   |     |   Comment #32
Sure PD. First you need to find a 0%/low/no/capped fee offer. Then if they give you checks you can just deposit them into the bank. Always make sure the checks are NOT considered "cash advances" bay calling/reading terms etc. If no checks are allowed you can transfer the debt on another card or if you have no debt just transfer it to a card with a $0 balance thus creating a large negative balance on the other card. Then you can call and ask for a "credit refund check" or a transfer to your bank account. There is never any "cash advance" involved at all as this will incur a fee plus huge interest. Once you have the cash you then must make the minimum required monthly payment on the 0% card in order to maintain that rate. Your score will drop a bit until you pay the balance off which is why I recommend having very large credit lines to keep your overall credit utilization ratio at 30% or below. I have a million in credit between the wife and I. So borrowing $200,000 is only a 20% utilization ratio for me. You score bounces back quickly after the debt is paid off. Right back to 830-850 for me. It drops to 740-760 while borrowing. Obviously you don't want to do this just prior to getting a home or auto loan.
deplorable 1
deplorable 1   |     |   Comment #34
I forgot a couple of things. You also need to remember to pay off the entire balance before the 0% rate expires. That date can be different from your payment due date for the month always best to call and double check this. Also for those who are a bit squeamish on the idea of requesting a "credit balance refund check"(I get it) there is yet another method called MS(manufactured spend). For example you charge $40,000 in CD's on card A then do a traditional balance transfer to card B rather than paying off card A with cash. You now have $40,000 borrowed at 0% for 12-15 months and no checks or over payment refunds required. Just make sure you have the liquid funds available when the 0% expires.
Predatory Depositor
Predatory Depositor   |     |   Comment #36
Thanks for that dp1. Impressive that you've got it down to a science like that. It's fascinating although I don't think it's for me.

Ever since I've had a credit card (going on 100 years) I've just used it to buy things and paid it off in full every month ... never paid a penny in interest, never used it to generate cash. I suppose that makes me a deadbeat in the eyes of the credit card issuers. I'm too good a payer.
#38 - This comment has been removed for violating our comment policy.
ra*
ra*   |     |   Comment #40
$50K @ 0% is hard to find -- all my recent "balance transfer" offers carry fees which negate (or nearly negate) the interest. As for RCAs, the money lost in credit cash back is insignificant and it's easy enough to do the transactions. The problem is when the bank lowers the rate and/or maximums.
deplorable 1
deplorable 1   |     |   Comment #41
Not hard at all. Bank of America has the best 0% no fee balance transfer for 15 months with no cap. The only cap is your credit line. link:
https://www.bankofamerica.com/credit-cards/products/bankamericard-credit-card/
ra*
ra*   |     |   Comment #44
Thanks for the info -- some people with a large BofA CL ($50K+) might be interested in a new card. On the other hand, $20K @ 2.5% is only $500/year (taxable interest) – in that case a typical sign-up bonus is better.
RBT1014
RBT1014   |     |   Comment #48
I want to use my BoA bal xfer offer to add funds to a rewards checking acct. BoA will direct deposit the bal xfer to a checking acct but charge a 3% fee. Any idea how to get around that fee?
51hh
51hh   |     |   Comment #42
@DP1: "Say I have $50,000 liquid earning 2.5% in a MMA but I then borrow another $50,000 at 0% which also earns 2.5% I have basically boosted the rate on my $50,000 to 5%."


It is $100K cash ($50K yours, $50K the bank's you borrowed) at 2.5% APY ($2,500 a year).


If you put it ($100K) all in RCAs, your $100K earns 4% APY ($4,000 a year); apples-to-apples comparisons. And you do not have money-market limitations.


Maybe we are making the same point that RCAs are more profitable than the NBD 2.5% APY offer?
deplorable 1
deplorable 1   |     |   Comment #47
I'm not knocking RCA's at all. In fact like you said you could actually do both and use the borrowed money to fill the RCA's since the accounts are liquid you would have no problem paying it off at the end of the 0% term. The overall ROI would most likely double CD rates on liquid cash. I just try to keep thing simple so scheduling a few credit card payments a month is quick and easy for me.
SDguy
SDguy   |     |   Comment #22
Folks RCAs are easy, 15-$5 transactions at Walmart, cashback even counts too and a transaction in/out with Tab Bank. 8-$0.50 transactions to Amazon gift card balance with direct deposit to Orion.
Right...
Right...   |     |   Comment #25
No thanks. I have much better and more enjoyable ways to spend time in my retirement.
willy12
willy12   |     |   Comment #28
In the time it took you to type one of your ever changing monikers and respond, you could have knocked out a half dozen 50 cent amazon loads.

A RCA or two or three does not take much time and it won't ruin your retirement.

No need to respond. Would not want to waste more of your retirement.
#35 - This comment has been removed for violating our comment policy.
Wrong...
Wrong...   |     |   Comment #29
I agree with Right...

Having to juggle all those reward checking accounts and small transactions is ridiculous! Are you folks really that hard up for a few dollars?! Or maybe it's just some kind of weird addiction you guys have....

I already know the answer. LOL!
#30 - This comment has been removed for violating our comment policy.
Heat Mizer
Heat Mizer   |     |   Comment #37
Totally agree with SDguy. RCAs are easy. I have two at the moment - Orion and Heritage. I'm already done for the month of November and will earn 4% on $30,000 and 3.33% on $25,000. I use the card for purchases I would make anyway - not wasting money. Grocery store self checkouts are your friends :)
111
111   |     |   Comment #39
I remember several years ago when the old FatWallet site was still up, a guy was speculating on whether a single grape would or would not register 1 cent on a self-serve grocery store checkout scanner - for RCA purposes, of course. That was a bridge too far for me.

But in the past I did use the scanner method. One thing to remember is not to scan 2 of the same item consecutively. Some scanner software will assume that's an error and disallow the 2nd transaction, and some debit cards will do the same (looking just at the amount). But the sequence Ramen noodle packet, banana, Ramen, banana, etc., will work fine.

These days I make the transactions a little larger and do most from home. I'm done with November as well, except for one bank where I do spread them out more.
51hh
51hh   |     |   Comment #43
FWF also developed a smart automated algorithm to do multiple debit card transactions much faster. But I am manual-kind of guy:D
willy12
willy12   |     |   Comment #46
I'm a fan of the amazon gift card loads at 50 cents each. Particularly in winter.

I had resisted doing that in years past because I had a lot of amazon gift cards from a 20% off deal way back when. Now,my balance is lower and $5-10 a month worth in cold weather works for me.
6479ct
6479ct   |     |   Comment #45
111 comment #39
HA! Now that I have picked my self up off of the floor, I have to say, that "...a single grape..." doubled me over laughing!

Once, when I was at Home Depot, I saw this guy at the self checkout scanning Carpenter Pencils (Less than $1 ea., maybe $0.10 ea.?). That gave me a good chuckle for the day!

Awesome, Man!

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