Best High Interest Reward Checking Account Rates
Updated Review Of High Yield Reward Checking Account Deals Below
Remarkably, despite a struggling economy and lower interest rates across the board, high yield reward checking accounts are still touting bank rates as high as 5.50% APY in certain locales. At their peak, the best reward checking account offers were topping off at an astounding 6.00-6.50% APY. Definitely nothing to sneeze at. However, before I get started on my usual long winded blog post about the financial possibilities and benefits of high yield reward checking accounts, let me say a few things up front. No, you’re not going to be able to roll your interest rate earnings into a mint or become a millionaire overnight. But if used properly in tandem with other interest chasing pursuits, high interest checking accounts have the potential to really give your otherwise idle savings a big boost. The associated interest rates with these special bank reward checking accounts are often higher than the top savings account rates, the best money market rates, and even the highest bank CD rates.
Demand A Higher Interest Rate For Your Checking Account Cash
Personally, I don’t usually keep a ton of money in my checking account to begin with, preferring to stash them in hassle free high interest producing assets like savings accounts and certificate of deposits. However, because check writing and convenient ATM access are still daily necessities in quite a few situations (example: not all apartment landlords allow tenants to pay their rent via credit card), most of us are still pressed into keeping a sizable amount around for such purposes. But unless you have a better storage solution for your on-demand cash, you might as well milk the most out of it while waiting for such checks to clear.
The vast majority of people don’t actually realize how pitifully low their checking account interest rates really are, particularly if they have accounts with big name banks like Citibank, Bank of America, or Wells Fargo. Despite their instant brand recognition, these popular banking institutions are notorious for shelling out ridiculously low rates – frequently only offering pennies on the dollar – in the neighborhood of 0.05% – 0.25%. With the way most banking transactions and bill payments are made online these days and with the way most online banks are offering reimbursements of customer ATM fees, there is no need to tolerate such paltry token interest payments any longer. A growing number of online banks and credit unions in out of the way places are leading the charge when it comes to offering its customers competitively high interest rates in exchange for their bank checking business.
However, to get those top high yield reward checking account rates – there is a catch – several in fact. Reward checking accounts often demand much more stringent and active account maintenance requirements than other bank account types like savings and even money market accounts. Most of the highest paying reward checking accounts require users to engage in fairly heavy debit card usage and agree to certain direct deposit activity pre-conditions – all designed to instill customer loyalty with that particular bank. Many of those hassling requirements are discussed in greater detail below, but fear not – most if not all can be overcome and easily met with some practical adjustments in your daily banking practices and changes in your tool of choice when making card based purchases.
List Of The Best Banks With High Interest Reward Checking Account Offers
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Meeting Reward Checking Account Requirements To Get The Highest Rate
Compared to savings accounts, bank CD deposits, and money markets – checking accounts, with all of their unlimited check writing privileges and unlimited ACH transfer benefits, are much more expensive for banks to operate and maintain. High yield checking accounts compensate for the extra cost of offering higher interest rates by requiring reward checking account holders to jump through extra complex debit account activity hoops and to satisfy higher monthly maintenance thresholds – in the hopes of turning them into loyal and dependent banking customers.
The requirements for each high yield reward checking account differs from program to program, but typically, certain requirements must all be met for the customer to maintain the highest premium interest rate yield. If all of the requirements are not met, the customer falls into a lower earning reward checking tier. Some of these requirements include a certain number of debit card usages per month, mandatory participation in online bill pay and direct deposit, and maintenance of a certain minimum monthly balance.
One thing you’ll notice among these high yield reward checking account offers is that most of the headaches and trickiness associated with their use are focused around the debit card transaction requirements. Many reward checking accounts require at least 10 or more debit card transactions a month to continue receiving the highest interest rate. Because not everyone is a habitual user of debit cards, it’s not always easy ditching the reward credit cards in favor of bank debit check cards. Ultimately, the banks that offer these lucrative checking account packages make money by profiting off of the debit card transaction fees and other charges that they hope you will accrue and rack up over time.
When it comes to meeting the debit card usage requirement, you certainly have options at your disposal. One is to simply use your bank debit card for all of your daily purchases and transactions as you would normally use your credit cards for. Another option is to purchase a large number of small denominational items (25 cent or $1.00 candies for example) once a month and spend a few moments at the self checkout aisle at your neighborhood supermarket and swipe each item in as separate debit card purchases – up to the required monthly number necessary.
Another interesting way to meet the debit card transaction limit is to make multiple debit card powered PayPal donations to charities of your choice up to the required number of debit card transactions. With minimum donations of $1.00 each, you should be able to hit your limit with ease. Not only does your chosen charity get a few bucks worth of donations, you get your high interest rate yield, along with payments that are also deductible as charitable donations come tax time (essentially hitting 3 birds with 1 stone).
Local Banks Are More Convenient, But Nationwide Online Banks Offer Better Deals For High Interest Reward Checking
In terms of ATM and branch accessibility, the emergence of ATM fee reimbursement programs and improved online customer support have greatly closed the gap between online banks and brick and mortar institutions. However, with all things considered, it’s generally still a better idea to go with a local bank or credit union whenever possible, particularly when it comes to checking accounts. Unlike savings accounts and CD’s which tend to see much more limited transactional activity in comparison, checking accounts are by their very nature, much more heavily used on a day to day basis. Because of their heavy involvement in ATM withdraws, deposits, check writing, and bill payment activity, they are more likely to demand a greater degree of customer service attention than more static savings based accounts. In the area of dispute resolution, it’s almost always better to have the option of speaking to a live customer service rep face to face at a local branch, than trying to explain your problem solely through email or phone.
However, it’s a trade off. What you lose in the way of convenience with an online-only or out-of-state bank, you are likely to gain back in the way of much higher interest rate yields for your willingness to accept a measure of inconvenience. Remember, the best reward checking account offers are not always found with banks that are locally based. Many of the best offers are found with fully FDIC insured banks that are frankly no names and located in the booniest of boonies.
April 9th, 2009 at 2:13 am
These reward checking accounts are fully FDIC protected right? Like if the bank or credit union offering these special interest rates suddenly go bellow up….my money would be guaranteed?
I’m a big credit card user as well….I don’t like the idea of having to make at least 10 debit card transactions a month (lost credit card reward potential) but I think the higher APY rate for reward checking may be worth it. I have been debating about going to a completely online only banking system complete with online checking and online only savings. Since most of these online banks reimburse for my ATM fee usage and I don’t anticipate customer service issues to arise…I think higher interest rate banks are the way to go. Good idea?
April 9th, 2009 at 2:47 am
Grant,
Yes, high yield reward checking accounts are almost always insured and protected by FDIC insurance up to the current $250,000 max limit. Just look for the FDIC logo before doing business with any bank to be on the safe side, or you can always look the bank’s name up on the FDIC website to pull up the company’s actual FDIC insurance certificate to double check.
Personally, I still use a brick and mortar bank as my primary checking account. But with the way high interest checking accounts continue to offer top rates for checking, I am starting to work my way towards an online only banking setup. So far, the only thing stopping me from going with an online checking account as my primary bank for checking purposes is my desire to speak to a live teller when major disputes arise. The issue of ATM fees is becoming less and less of a problem with some of these unlimited ATM fee reimbursement programs that are being floated around these days.
April 9th, 2009 at 8:16 pm
I have been using an online reward checking account since Sept 2008. The high interest rate has been rewarding, and since I use my debit card for most of my small day to day purchases anyway, I easily make the requirements. I also own a local brick and mortar bank – it automatically sends a deposit to the online account to satisfy that requirement. Not having a local ATM is a mute point – the fees are refunded at the end of the cycle if the requirements of the account are met.
Basically, I am using the bank as a CD-type savings. I keep the maximum in the bank up to the limit, and add just enough money to cover the expenses for the month. The only down side compared to the CD is that the interest rate has been decreasing steadily. When I first started, I was receiving 6%. Now my current bank has just reduced it to 3%. I am currently in the process of moving the money to another bank where the rate is 5.25%. I prefer this over tusing CDs for emergency cash. Plus, it is paying better than any current CD.
April 10th, 2009 at 10:24 am
Hey James
Thanks for your comments about your usage of these reward checking accounts. I’ve been reading up about these high yield bank accounts and have debating whether to get into the or not. I currently keep my savings in a regular high interest savings account and CD’s (FDIC insured!), but I keep my checking in my neighborhood credit union. Interest isn’t a lot which is why I want to upgrade to an online checking that offers a more competitive rate.
It’s actually pretty amazing how high these high yield checking accounts go in terms of interest rate. But I guess the catch are the debit credit card usage requirements and the maximum balance cap as the blog writer indicated.
Have you found it annoying to keep having to funnel money from your high yield reward online checking account into your regular brick and mortar bank account for daily use, or are you using your online checking as your primary checking account now? The reimbursement of ATM fees is what’s really drawing me to these online accounts….that and the high APY interest rates they offer!
April 10th, 2009 at 12:50 pm
By signing up with a online bank in another town. Are the ATM transactions higher? BTW an informative article.
Thanks,
April 10th, 2009 at 1:35 pm
Omar,
I’m not entirely clear on your exact question, but I believe you are asking whether or not an out of state bank as opposed to a local in-state bank would cause you to incur a higher ATM transaction cost overall – am I correct?
In general, banks charge a flat per ATM transaction cost for the use of out of network bank ATM’s. However, a rapidly expanding trend among online banks, particularly those that offer high yield reward checking accounts, is the reimbursements of some, if not all, of their online customer’s out of network ATM costs. In such a case where ATM fees are completely reimbursed, your ATM cost of use should be the same whether you go with an in-state bank, or a national bank located in another state.
April 14th, 2009 at 1:37 pm
I have been trying to look for the charities you mentioned that would accept Paypal, and is having a difficult time. Most of the ones I know about do not accept Paypal. How does one find out which charities uses Paypal? I have been thinking getting these accounts for some time but it seems like it’s such a pain to have to use the debit card every month on things that I don’t need–even if it’s $1 candy. I would like to donate the money if I can find out the various organizations.
April 14th, 2009 at 1:45 pm
Annie,
You are correct…the vast number of charities out there do not accept PayPal payments because of the Paypal fees involved, and furthermore, many only accept check or credit card payment for donation purposes – debit cards are frequently not accepted.
However, there are a few charity intermediaries out there that do indeed accept PayPal charitable donations and allow online users to direct their donated funds towards specific good will charities. Check out the following short list of charities and charitable organizations that do accept Paypal payments.
1) Network For Good
2) Charity Navigator
If anybody else knows of any other charity or charitable go between organization that accepts PayPal debit card payments, please list them for everyone’s benefit. Thanks!
April 14th, 2009 at 1:57 pm
Actually, I have not had a problem transferring money out or into the account. I transfer enough money into the account to cover the expenses for the month when added to the interest. Technically, I nearly live off the interest received from the account – it pays for gas, groceries and lunch. I add another $50 each month in case I go over the interest gained. If the extra money grows over $500, I remove it (has not happened except once)
April 16th, 2009 at 1:01 am
Thank you, Raymond. Network For Good is an excellent site, it had all my organizations in one place. Perfect. I know they do take a 4% or so cut, but it’s totally worth it. Thank you so much for the information. Greatly appreciated.
April 16th, 2009 at 2:30 am
For the benefit of other readers….Network For Good is sort of an intermediary between the donation contributor and the charity. You purchase “Good Cards” and direct the funds to be sent to the charity of your choice. Like Annie mentioned, they do deduct a fee for their services but for those looking to make their donation payments via PayPal (debit card or credit), it’s one of the few options available out there. Charity Navigator is also another great and recommended online charity management service to use.
April 20th, 2009 at 2:12 pm
These accounts are a great option. I definitely recommend the account from Coulee Bank. @ 5.01%. It’s all about finding a bank you can trust, rather than an account you can trust.
April 25th, 2009 at 2:22 pm
Can someone provide me a list or at least a name of an online bank with national nation wide presence that offers free check deposits from home. I’ve heard of banks that offer this service where they give you a check scanning machine to allow business owners the ability to scan checks for deposit from home without having to constantly visit a bank branch of ATM machine.
May 1st, 2009 at 6:22 am
Garrett,
Lots of these nationally available reward checking account banks offer features that include the ability to make check deposits from home. Check out First City Bank. They offer a very intriguing Express Deposit gadget that customers can utilize from the comforts of home to make checking account deposits without having to physically visit a bank branch office or ATM.
May 3rd, 2009 at 4:48 pm
I would like to know how to keep the balance right under the balance requirement if we were getting the higher interest rate. I understand that 10ATM transactions must be fulfill and we may send in a personal check as direct deposit{?}. I plan on opening one of them and it is not going to be the primary checking acct that I will be using daily. I mainly need the high rate of return since I am getting ready to retire. Thanks
May 3rd, 2009 at 4:59 pm
Andrea,
I’m not entirely clear on what exactly you are asking…but the 10 transaction requirement that many of these reward checking accounts impose is related to the debit card use as it relates to actual purchase transactions. I assume when you refer to the “10 ATM transactions” you are referring to that and not merely ATM transactions as it relates to ordinary ATM deposits and withdrawals.
In terms of keeping your bank account balance below the maximum allotted limit for the maximum checking interest rate offered, my advice is to simply monitor your accounts extra closely or set up some type of automatic email or phone text system that alerts you when your balance falls or exceeds a certain threshold. There are banks that offer this type of alerting service for their account customers.
Another idea is to go with a high yield reward checking account that offers a very high maximum balance. Take a look at the chart above…there is at least one online bank that offers a maximum limit at the highest APY interest rate up to $250,000. It’s interest rate yield isn’t the highest compared to its competitors, but it has the highest max balance limit of any.
May 17th, 2009 at 4:59 pm
Your website needs updating. Many of the rates have changed. Wichita, Olmsted, and Evantage are only paying 4%.
July 3rd, 2009 at 2:22 pm
The listed high yield rates appear to be accurate as of July 2009…pretty impressive! 5.00% and 4.00% APY rates?! That’s amazing for bank rates at this time. Too bad the debit card usage requirements makes the reward checking accounts rather difficult to maintain however. I guess that’s the catch – there’s always that naggy catch.
July 6th, 2009 at 4:06 pm
I just found a funny new bank…maybe not new but the name was certainly new to me – Red Neck Bank – http://www.redneckbank.com/
Is this online bank for real or is it some April Fool’s prank? Instead of an image of a banking customer or something, the bank features a laughing horse with its gums exposed on the website. The website is funny but the very competitive and attractive 4.00% APY interest rate is no laughing matter. It seems legit – FDIC insurance coverage etc. Does anyone have a checking or savings account account there? Thinking of setting up any account just for the weirdness factor..heh
October 22nd, 2009 at 1:45 pm
I am have been interested in finding one of these high interest checking accounts. Some that I have seen you have to be within a certain distance from the bank. Do you know of any by Chicago or without distance restrictions with a good return?
October 31st, 2009 at 12:27 pm
Can you transfer money out of one bank using bill pay into another bank therefore having it appear as a direct deposit? Will that satisfy the 1 direct deposit as required?
Any ideas on how to generate various ACH’s? I already have my phone bill, my electric bill and my water bill as ACH’s at different institutions to satisfy the ACH requirement on their rewards checking accounts. I am running out of ideas on how to meet the ACH or direct deposit requirement. I don’t know if my regular longtime bank (Chase) evens allows transfers to other banks without charging. Any ideas?
November 3rd, 2009 at 5:52 pm
For Dena: There is a long list in ILL. from highyieldchecking, several 5% offers. Good luck.
For Peggy: Yes, for most banks. Some actually need payroll DD. So it is YMMV; find out for your own case. Some will accept their own Billpay as DD requirement. To help you out: 1. Use utility bills: pay $1.00, $1.01, etc. to all your RCAs. 2. Use banks such as Ally to do ACHs, they usually count. 3. Use RCA banks to transfer amongst themselves; e.g., Bank A –> Bank 2; this will usually meet requirements for both. Make sure you do more than one in case some transfers do not count. Good luck.
November 4th, 2009 at 11:34 am
FAB&T changed rate to 3.5% as of 3 November and limit to $35K/one account only as of 2 December; FYI.
This account is out of the door since there remains many RCAs above the nominal 4% APY.
November 4th, 2009 at 11:42 am
And Charter is at an amazing 1.25% APY, with an increased $50K limit; only one debit transaction is required.
What were they thinking??
December 1st, 2009 at 4:38 pm
Two more banks to add to the list are Tri Counties Bank, Modesto, CA paying 3% on checking and Bank of the Sierras paying 4.51% on checking. I have experience with both and they are as advertised.
Rick
December 4th, 2009 at 7:52 pm
BotS dropped rate (now 4.09%) right after the Bank Deals site broadcast (as best RCA in the nation). Luckily, the drop is “tolerable.” I am still staying with them.