It’s been a while since we reported on a decent rewards checking account so we thought we were overdue to uncover one of these diamonds-in-the-rough-savings-vehicles. For those of you who may be unfamiliar with these somewhat peculiar banking products we’ll give you a quick rundown…
Rewards checking accounts are essentially high interest checking accounts that come with a few strings attached. They made a lot of noise in 2009 and 2010 when CD rates began to nose dive into the abyss and have since seen their rates drop significantly as well. They are primarily offered by credit unions but can also be obtained by larger banks now as they’ve grown in popularity.
Here’s what you’ll typically get: an incredible interest rate (check out the one we’ve highlighted below which is paying a whopping 4.09% APY on balances up to $25k), a maximum balance allowance to earn the high APY, a few withdrawal allowances per month (similar to a money market account) and free ATM usage.
Here’s what you’ll typically have to do to obtain the bank or credit union’s advertised rate: set up a recurring payment from the account. This can be used to pay for any monthly bill (ie mortgage, auto loan, credit card debt, etc). Make a certain amount of transactions per month with your debit card from the account (usually around 10 or 15), and conduct your banking online with e-statements and other online banking tools.
Thanks to BankVibe.com reader Tony for forwarding us a fantastic example of one of these accounts available today. Consumers Credit Union (out of Illinois) has a rewards checking account paying an incredible 4.09% APY on balances up to $25,000 PLUS a still respectable 1.59% APY on balances exceeding that amount. To keep earning this interest on your balance you’ll have to:
- Complete at least 12 Debit/Check Card Point-of-Sale Transactions (transactions must be made without using your Personal Identification Number, or PIN, to count towards the minimum of 12 and must be posted to your account on or before the last day of the calendar month).
- Each month, make one direct deposit OR one ACH debit OR pay one bill using Consumers Credit Union’s free online bill payment system
- Enroll in online banking
- Opt for electronic statements rather than paper
We also made note of Consumers Credit Union last week for offering one of the best credit cards from a credit union.