Internet banks have become a popular place to stash money that we don’t want to invest and may not need for everyday use. The original attraction of the online banks was that they paid higher interest rates on savings and money market accounts than we could find at traditional local brick and mortar banks. That is no longer the case. Some local and community banks now offer rewards checking accounts that pay interest at rates that are two or three times higher than an online savings account or even a typical CD rate. You just have to know where to find them. I can help.
What Are High Interest Rewards Checking Accounts?
- High interest (3%-5%) is paid on all balances, up to a balance cap of either $25,000 or $50,ooo.
- No set-up charge or monthly fees.
- No minimum balance.
- The account will includes a Visa-branded check card that can be used at ATMs nationwide.
- The bank (which is local or regional) will reimburse all ATM fees for use of any machines outside of its network. (Some banks cap the monthly ATM fee reimbursements so check for that.)
- Unlimited check writing with no per check charges.
- Some of these accounts offer rewards points programs, such as ScoreCard Rewards.
- The accounts are FDIC insured.
These are the typical requirements to earn the highest interest rate:
- You must set up at least one direct deposit or automatic bill payment.
- You must receive monthly bank statements electronically.
- Access the account online at least once each month.
- You must make at least ten check card transactions each month (not just ATM withdrawals).
If you think about it, these requirements are not onerous. The electronic monthly statement is easy as is the once per month account access. The direct deposit can be your paycheck – just tell your employer where to send it. Alternatively, you can set up an automatic payment of your telephone bill, mortgage, or any other vendor that accepts electronic payments (most do). These accounts offer free electronic bill pay.
Achieving the minimum number of check card transactions should not be difficult. Even if you are in the habit of swiping a credit card instead of your check card for routine monthly purchases, change that habit ten times each month and you’re earning 3-5% on all of your funds on deposit. Now is a good time for all of us to reduce our use of credit cards. Earning extra interest on our bank balances can easily beat the benefits of using credit transactions.
By the way, even if you don’t meet the requirements one month, the only penalty is that the interest rate drops for that month.
Where to Find High Interest Rewards Checking Accounts
The standard resource for locating Internet bank savings accounts is Bankrate.com. The problem with using a standard account finding resource is that the banks that offer the best high interest deals are smaller. You are unlikely to find the community or regional banks that offer the best high interest checking accounts at Bankrate.com. (I could not when I tried.)
However, there are two excellent resources for finding local banks that offer the best deals. First, many of them are listed at CheckingFinder but not all of them. CheckingFinder has a video and FAQs on its site that summarize these accounts in general and then links to each specific community bank or credit union high interest account.
Another resource for finding these banks and accounts is High Yield Checking Deals. This site organizes the accounts by state. This is helpful if you want a bank with a local branch. But keep in mind that you can bank with any of them because your ATM card can be used anywhere. Everything else can be done online.
For many of the best deals, you may have to do a little digging. These banks have small marketing budgets). Check your yellow pages or the business section of your local paper, then go to the community bank websites. That’s where you will find the account details and account sign-up information. Don’t overlook credit unions. Some of the credit union accounts are listed on CheckingFinder.com and High Yield Checking Deals.
Although many of the banks offering high interest checking accounts are small, others are more regional. As one example, Renasant Bank has branches in three states and offers online checking paying 3.51%.
Final Thoughts on High Interest Rewards Checking Accounts
We baby boomers need all of the help we can get in boosting our retirement savings. The big banks have not been our friends. Local and community banks often provide better customer service and with these special checking accounts, make us more money. So why not use them?