An Introduction to High Yield Reward Checking Accounts

By Xin Lu on 12 August 2009 4 comments
Photo: dichohecho

Reward checking accounts are currently some of the highest yielding accounts available at FDIC and NCUA member banks. These accounts currently have yields of up to 6% and that is much higher than yields of 2% to 3% paid by CDs and savings accounts. Here is a quick introduction to what they are and how you can take advantage of these accounts. (See also: 7 Banks Still Offering Free Checking and Great Interest Rates)

Rewards checking accounts are basically checking accounts that give a reward interest rate when a customer fulfills a set of requirements every month. Generally the customer has to get a debit card from the bank and make 8 to 20 debit card purchases per month. Some banks also require that the customer set up direct deposit and electronic banking. Additionally, there may be a deposit limit for each account. If the customer does not meet the bank's rules for a month then the interest would not be paid out. Generally these accounts do not have a monthly fee and the interest rates can be changed by the bank at any time since they are liquid accounts.

The great thing about these accounts is that they are insured and your money is more liquid than money in a CD. They also have high yields, but fulfilling the debit card requirements for getting the yields may be cumbersome. Some people have strategies such as buying $1.00 of gas at a time until the number required is fullfilled, but this can be time consuming. Also, if the customer forgets to do this in any months then the yield is forfeit. The banks basically count on the customers to not fulfill their rules in order to profit. You really have to see if the extra few percentage points in interest is worth the extra work. For example, if you only have $1,000 in the account and the yield is 3% higher than your normal savings account, then you would only earn $30 more a year for the extra debit card purchases you have to make and that may not be worthwhile. However, if you have $50,000 in the account you would earn $1,500 more a year, and that may be worth considering.

Many of the highest yielding reward checking accounts are offered by small regional banks and credit unions. A good list of these banks is here at High Yield Checking Deals. Most of these banks only take local customers, but some banks offer nationwide accounts. As of today the highest yielding reward checking account is at United FCU. This is a credit union paying 6.01% on its reward checking account and it operates in parts of Michigan, Ohio, Arkansas, and North Carolina. 

As with any financial account or product, you should always read the fine print before taking the plunge. Each bank has its own rules on who qualifies for their yields on the reward checking accounts and you must be very diligent to make sure that you qualify for the reward every month. Also you should check for any account fees and minimum balances and also make sure that the bank or credit union you are doing business with is FDIC or NCUA insured. This type of account may not be right for everyone, but it could be great for those who have a good chunk of cash and want a safe high yield account that could also be used as a checking account.


Tagged: Banking, checking, saving
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Great article! Do you know of any checking rewards accounts aith a credit union or bank in canada?

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I have one of these accounts and I find it worth the trouble of meeting the requirements - which isn't that hard to do. Opening an account at a local bank that only accepts local customers should lower the chance of the bank dropping the rate after you sign up.

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I’m getting really competitive rates with a product called easyGROW Checking at First Bank & Trust. You can go to for the info (including the current interest rate); but to summarize, it is a free high-yield account that also offers ATM fee refunds when I meet the three qualifications: using my debit card at least ten times, receiving e-Statements, and having a least one direct deposit or automatic payment each cycle. I do all of those things anyway, so it’s been really easy for me to qualify…and they send me an email each month to let me know if I met the qualifications. I have to admit, I love not having to worry about whether or not an ATM is on my network, and the interest is already starting to add up. It only takes $100 deposit to open the account, and there is no minimum balance.

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I have three high-yield checking accounts with three different institutions. I am currently earning 4.25% on $25k, 4.26% on $10k, and 4.09% on another $10k. I don't find the requirements a problem at all. For the direct deposits, my employer will break out my payments into as many accounts as I want. For the debit purchases, I use the cards online to make $1 payments to my cell phone account. I make over $130/month in interest.