Remember the good old days when it was easy to find a reward checking account? There were numerous high yield checking accounts offering great rates and quality rewards just for signing up and following a few rules. While those days were only a couple of years ago, it seems like the rewards checking account is ancient history.
Many banks suffered greatly from the financial crisis, leaving some bankrupt and forced to close, while others tightened their standards to accommodate a loss in capital and new banking guidelines set forth by the government.
As a result, finding a high interest rate on a checking account isn’t easy anymore–but it’s not impossible. The question, though, for the rewards accounts that actually exist is are they truly rewarding?
Checking Accounts Have Suffered Since the Financial Crisis
The financial crisis had a definite impact on banks around the country. As of June 2011, 367 banks had failed and hundreds more were on the failure watch list created by the FDIC.
With many banks unable to survive the catastrophic results of the crisis and others struggling with the tougher guidelines placed on them from the Dodd-Frank Wall Street Reform and Consumer Protection Act, they have had to make adjustments to their fees–or at least that’s the claim.
In Is the End of Free Checking Overblown?, it was revealed that banks had been posting bigger-than-expected profits over the past quarters. So their adjustments to their fee structures and interest rates offered had more to do with anticipation of a stagnant economic or mortgage recovery.
But regardless of banks’ motives for restructuring their fees and offerings, checking accounts have indeed been impacted, especially rewards checking accounts. Over the past few years, once-amazing rates have been plummeting across the country.
Best Rewards Checking Accounts
It’s hard to believe that while many checking and savings account rates have dropped significantly over the past few years, there are still a few banks out there offering reward checking accounts with great checking rates.
Here are 10 of the top reward checking account rates in the country as of June 6, 2011:
1. La Capitol Federal Credit Union (Louisiana): 5.25% APY–All Access Advantage Checking (Min. to open: $50)
2. First State Bank of Middlebury (Indiana): 5.18% APY–Main Street Rewards Checking Bonus Level 2 (Min. to open: $50)
3. Southern Bank (Missouri): 5.01% APY–Kasasa Cash (Min. to open: $100)
4. Florida Central Credit Union: 4.50% APY–Ultimate Checking (Min. to open: $25)
5. Golden Plains Credit Union (Kansas): 4.44% APY–Golden Rewards Checking (Min. to open: $100)
6. Fort Still Federal Credit Union (Oklahoma): 4.38% APY–Rewards Checking
7. Coast Community and Teachers Credit Union (Texas): 4.33% APY–Bonu$ Checking (Min. to open: $50)
8. University of Iowa Community Credit Union: 4.25% APY–Rewards Checking (Min. to open: $50)
9. The American National Bank of De Kalb County (Illinois): 4.25% APY–Kasasa Cash (Min. to open: $50)
10. Mutual First Federal Credit Union (Oklahoma): 4.15% APY–Rewards Checking (Min. to open: $100)
It’s great to know there are some banks out there offering reward checking accounts that still appear to be rewarding. To determine the best checking account for you and what you will need to do to qualify for the rates, you will need to contact the banks directly for more information.
Related Checking Accounts Articles
- Checking Account Rate Deal of the Day: La Capitol Federal Credit Union at 4.25% APY
- Checking Account Rate Deal of the Day: Plus4 Credit Union at 2.51% APY
- Checking Account Rate Deal of the Day: Labor Management Federal Credit Union at 0.75% APR
- Americans Are Ditching Their Checking Accounts in Favor of Prepaid Cards
One minor point I’d dispute is that glory days of this style of account are now “ancient history”. There are actually more community banks and credit unions offering REWARDChecking accounts now than there were 2 years ago. I know because our company, BancVue, is the innovator and primary provider of the software and consulting services for this type of account.
As for the rates being lower…well the whole market is lower. A few years back finding a 3% CD was a snap! Good luck today. REWARDChecking style accounts are financial tools that help community FIs either grow their balance sheet or replace non-core deposits with core deposits. As a result, consumers should not be surprised that the institutions providing these types of accounts adjust their rates to be inline with prevailing market conditions. Takeaway: It’s still a killer rate, even at 2%, compared to what you can find at most mega banks.
And why in the world would you bank with a mega-bank that caused a world wide recession and treats you like a number when you could get that great rate of interest in a REWARDChecking account from a community FI that is the back bone of your town’s economic engine?
Thanks
Gabe Krajicek
As a marketer of this product (one that made the top 10), two unfortunate things make it difficult to maintain that rate: The first is ignorant legislators that haven’t a clue about the cost of running a debit card program, or the benefits of overdraft privilege.
The second are the gamers out there that manipulate the product and thus drive up the cost. The rise in cost usually results in a lowering of the rate. By “gamer”, I mean the people that do 14 $1 transactions at a gas pump in order to satisfy the debit card usage requirement. The account is built to reward a person for giving an institution their PRIMARY checking account…not reward people for manipulating a product to behave more like a money market. It’s a shame the majority of people that use the account right are punished by the people that exploit it.