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Here's another good newspaper article on reward checking accounts. This one is from the St. Louis Post-Dispatch. It describes the experiences of several St. Louis banks with these reward checking accounts. It also has an interview with the chairman of BancVue, Don Shafer. BancVue is the main marketer of reward checking accounts. Shafer admits that he has received a lot of disbelief of the reward checking concept from bankers, but he has warned them of the threat of internet banks will have on community banks. He compares this threat to the threat online travel sites have been for travel agents in the last 10 years.

One of the banks mentioned was Champion Bank. There were a couple of interesting things to note from this excerpt on Champion Bank:
Champion also cut its interest rate from the initial 6 percent in 2006. That rate was a half percent higher than its highest CD rate at the time - 5.5 percent. With the income from debit card transactions and savings on statements, Champion's cost for the accounts was 4.5 percent.

Champion's current rate on rewards checking is 2.5 percent, reflecting the general decline in interest rates in recent months.

So it appears the debit card fees and the cost reduction of e-statements covered about 1.5% of the cost of the reward checking. However, the disturbing thing to note is how much it has cut the rate. It's now only 2.5%. I first posted on Champioin Bank in May 2007.

There's a new resource for reward checking accounts called CheckingFinder that seems to be affiliated with BancVue. The website just became operational today. I've just given it a try. There are some nice features, but it still leaves out many reward checking accounts. Many of the accounts that they do list appear to be available nationwide. Each has a link to an online application page. For more reward checking accounts, you can find them at my website High Yield Checking Deals.

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Anonymous   |     |   Comment #1
I wonder if there are reward checking accounts not affiliated with or created by BankVue.

Does it matter?
Anonymous   |     |   Comment #2
New Frontier Bank in Colorado just cut its rate on the reward checking from 6.26% to 5.26%

It is still one of the better rates out there for reward checking accounts
Anonymous   |     |   Comment #3
be careful with that site 3 out of 4 banks i checked offered 50 bp lower rate than going through bank site directly
Anonymous   |     |   Comment #4
That Checking Finder website is pretty crappy. It insisted on finding banks & CUs more than a thousand miles from my location and didn't find a local one that pays a higher interest rate than some of those listed.

Do they pay to be included on that sitelike they do on BankRate?
Anonymous   |     |   Comment #5
Yea, i wouldnt apply at all using that this CheckingFinder website. It really looks sketchy and non-trusting; it gets money based on clicks to those far-fetched banks.
Mario   |     |   Comment #6
Thanks for this article, BankingGuy. I would find it difficult to believe they could save 1.5% cost if you max out the account - it would have to be $31 per month per account. My guess is that most people keep lower balances (say 5-10k) and a large percentage don't meet the monthly requirements (I read somewhere 40%) which would put the 1.5% interest cost at $4-$8 which seems more reasonable to be covered by debit card and online statement savings.

BankingGuy, I have a question. I'd like to help my reward checking CU maximize what they get from my debit card usage - can you explain the debit card fee structure? Would many small transactions be preferable to a few larger ones?
Anonymous   |     |   Comment #7
I would also like to see some kind of fee structure break down. Sure seems like that info would be available for business owners and such, but I must be searching in the wrong places.

I know that one of my debit cards pays me .05 cents everytime I use it like a credit card, yet doesn't give me anything when I use a pin number. This tells me going through the credit card companies is more profitable, yet my high interest accounts let me do it either way.
Banking Guy
Banking Guy   |     |   Comment #8
I had described data from one credit union with a 6% reward checking account in this post. Their average reward checking customer has a $6,500 balance. If the average customer makes $1,000/month in debit card purchases and the credit union makes 2% off these purchess (just guesses. they did not provide this info), that would cover $20 of the $32 of interest that the credit union would pay for the $6,500 average balance.

About the debit card fee structure, I believe banks and credit unions get a higher percentage from purchases when you treat it like a credit card (when you don't enter your PIN.)

Some banks actually require this signature-base debit card usage to cover the 10 per month requirement. Chase's recent $75 debit card promotion also required only signature-based purchases and not PIN base in order to qualify for the bonus.

As for small transactions, I'm not sure if each transaction has some base fee before the percentage kicks in. Even if there's a 20 cent fee for the first dollar purchase and 2% for above, that's not going to amount to much if you only make $20 in purchases for a month. Banks are probably hoping for hundreds of dollars of purchases (if not thousands).
Anonymous   |     |   Comment #9
Price around based on the info from the following PDF's at Visa's and MasterCard's websites; VISA:|/merchants/index.html|Visa%20USA%20Interchange%20Rates
Their Interlink rates, imho, is the visa network for PIN-based transactions, which is much less than the fees for non-pin based.

You can see the page with "PIN Debit POS" for rates, as well as non-pin based, as well as the different rates for different MC credit cards (ie. Elite, World, Platinum, Regular). If you really love your bank and want them to maximize your use of their account, just dont fulfill any of their requirements and have a large balance in the account... they'll like you :)
Anonymous   |     |   Comment #10
I think the website is great and I appreciate the fact that I can compare accounts across the country to find the best one for me. Before now I was limited to banks that were local and I couldn't find one with such high rates. I never go into the branch anyway, so why would it matter if it's close to me? I'm just glad I found an awesome rate!
koz22   |     |   Comment #11
Coulee Bank is offering 5.10% APY on Rewards Checking. It is FREE and available nationwide. Apply at
koz22   |     |   Comment #12
*5.01% on the Coulee Bank Rewards Checking.

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