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Overview of Reward Checking & Our Reward Checking Table

Overview of Reward Checking & Our Reward Checking Table

The basic idea behind high-yield reward checking accounts is that the customers are rewarded with a high interest rate when they perform certain activities on their checking accounts.

The high interest rate is high relative to other deposit accounts that are typically known to have higher interest rates than checking accounts. For example, many reward checking accounts have rates that are 100 basis points above the top internet savings account rates. Reward checking accounts do require some work and they do have catches, but they do function in a way that’s a win-win for both the bank and the customer.

When reward checking accounts first appeared more than 10 years ago, it wasn’t clear if these high rates were just teaser rates. Were these reward checking accounts going to last over the long run? Reward checking hasn’t taken over, but it has grown. 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. Reward checking rates have gone down in the last 10 years in this low interest rate environment, but many of these accounts still have rates much higher than the best internet savings account rates.

What’s a high-yield reward checking account?

The essential feature of a high-yield reward checking is that you are rewarded with a high interest rate if you meet monthly requirements. Most also reward you with ATM fee reimbursements if you use ATMs at other banks. Below is a summary of the rate structure:

  • Some top rate (2% is typical, but can be as high as 5%) for balances up to a cap ($10,000 is typical, but there are many with $25,000 caps.)
  • Much lower rate (i.e. 0.10%) for the portion of the balance over the cap
  • Tiny base rate if requirements are not met (i.e. 0.05%)

The typical monthly requirements include:

  • 10 to 20 debit card purchases
  • At least one direct deposit or ACH transaction
  • Receiving electronic statements

There are sometimes additional requirements such as logging into online banking at least once a month or performing online bill payments.

The large majority of high-yield reward checking accounts are also free checking accounts. There’s no monthly maintenance fee even if you don’t meet the activity requirements. If you don’t meet the monthly activity requirements, you just won’t earn the high yield and you also won’t receive the ATM fee refunds.

Kasasa Cash Accounts

The most common reward checking account is the Kasasa Cash account. Kasasa (formerly called BancVue) is the company that launched reward checking accounts more than 10 years ago. As of August 2016, they power Kasasa accounts at more than 400 community banks and credit unions. One important feature of Kasasa accounts is that they are free accounts. A Kasasa Cash account is a free checking account. The monthly activity requirements only apply to qualifying for the high rate and/or the ATM fee refunds.

Another important feature of Kasasa is that Kasasa accounts are not just high-yield reward checking accounts. Kasasa Cash is the high-yield reward checking account. There are other Kasasa accounts. One is the Kasasa Cash Back account in which the rewards are paid as a percentage of debit card purchases.

Searching for reward checking accounts using our table

As I mentioned above, our reward checking account table lists 926 accounts as of August 2016. This includes Kasasa Cash accounts and reward checking accounts that aren’t affiliated with Kasasa.

Use this table to find the reward checking accounts that you are eligible for and that best serve your needs. You can find the link to the reward checking table in the top navigation bar under the “checking accounts” dropdown menu.

At the top of all account tables is a box that filters accounts based on deposit amount and the type of institution. If you de-select “web only”, only institutions with branches local to you will be included in the table. If you select “all credit unions” instead of “easy access only”, credit unions with narrow fields of membership will be included. Narrow fields of membership are primarily limited to select employer groups.

The deposit amount field is very important for the reward checking table. The yields that are shown in the table depend on this deposit amount setting. If the deposit amount is set at or below the balance cap of a reward checking account, the top reward checking yield will be shown in the table. This makes it easy to filter out accounts that have low balance caps. The yields are shown based on the deposit amount. So if the deposit amount is above the cap, the low second tier rate will be displayed.

The accounts are sorted based on the earnings and not yield. This allows you to find the account that offers the most interest for the specific deposit amount. For example, an account that pays 2% for up to $25K will pay more interest than one that pays 2.50% for up to $10K if the deposit amount is $15K and the second tier rates are inconsequential.

Another table feature that’s very important for reward checking accounts is the “details” button which is located on the right side of each row. Selecting this button will expand the row displaying the details of the account. This is where you can find the details of the monthly requirements such as the number of debit card purchases. It also will show you the rate tiers and the history of the top rate tier.

More Reward Checking Details

This is the first in a series of articles on high-yield reward checking accounts. Additional articles will provide more details on all aspects of reward checking. Below is a list of these articles. This list will be updated as reward checking articles are published.

decades   |     |   Comment #1
I remember Midwest cu used to pay 7.15% on reward checking ....sigh
moneysaver   |     |   Comment #2
It's all relative. I happen to live in a state with pretty good interest rates. So even now, I've got a couple RCAs that still pay 3%, and others in the 2 to 2.5% range -- rates that are better than most of even the longest-term CDs being offered right now. And, unlike long-term CDs, I can withdraw and/or move the RCA funds any time I want. Yes, there was a period 2-3 years ago when I lost/was forced out of some existing RCAs when various institutions cut their rates. But in the last year-plus, none of my remaining RCAs have had rate changes, and I was able to open some new ones along the way as replacements with decent rates. So things seem pretty stable on the RCA front right now. Sure, a 7% FDIC insured account would be great. But in today's environment, 2-3% isn't bad!
Anonymous   |     |   Comment #3
How is everyone using their debit cards for these RCAs? Is it to buy the least expensive item at the store, 10 or 12x each month, or manually pump gas with multi swipes? Or, is everyone using their debit cards for usual purchases? 
I ask because there are more credit cards that give at least 1% ca$hback on all purchases, and some give 1.5%, 2%, or even 3% or 5% categorical 3-month spend. 
moneysaver   |     |   Comment #4
I want to get paid for saving my money --  not for spending it (and thus giving it to others). So while I have various of the cash back credit cards, I earn far more money off my RCA interest payments than I ever would thru credit card spending.

As for RCA purchases, I pretty much cover all my required purchases through a combination of  the following: grocery store purchases (smaller ones every couple days instead of once a week or once every two weeks), misc. dining out, public transit card top-ups, and routine shopping (Amazon, drug stores, etc.) My individual RCA purchases rarely exceed $25 per.

Generally speaking, I try not to pay cash for almost anything, and try to use my RCA cards for anything I buy. If there's a place that only takes cash, generally speaking, I'll go to a comparable merchant that accepts debit cards instead.
Anonymous   |     |   Comment #5
It would be a great investment of time and gas for me going to the grocery store every couple of days. Also most people buy more than they plan when they to the grocery store. I use my credit card for all purchases. I get 3% on grocery store purchases and get 1% on everything else. I have a 5% gas discount card. For you it works which is great. It's like rate chasing;. it depends on the time and effort you want to put into it.
Anonymous   |     |   Comment #6
Unlike you, my RCA purchases rarely exceed $3; sometimes as low as $0.49 for fruit. Everything else goes on my 1.5% credit card because all the small purchases add up to some nice bonus cashback that you would not get when using the RCA debit card.