Feb 20, 2009

6.01% APY on your Checking Account! Wait, it is too good to be true.

So... this seemed too good to be true. I just found out, it is. The offer is only available for people who live in the bank's county in Illinois. So much for 6% APY. There's nothing like that around here!

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I was listening to my favorite talk radio program - The Ray Lucia Show - yesterday, and a guy called in to ask about a 5% APY checking account he saw advertised on the Internet. He wanted to know if it's legit.

Since I haven't seen any set APY rates of 5% since three years ago, when I saw those rates on a CD, I was intrigued. The "Brain Trust" team at the radio station did a little research and found out that, indeed, this offer was through an FDIC insured bank and it was legit. Of course there was a catch - you have to 1, have direct deposit and 2, use your debit card at least 10 times per month/billing cycle.

That left me with the question - what happens if you don't. So I did some research online and found that many smaller banks are offering up these high interest checking accounts to lure in new customers. Smart for them.

I just opened a 6.01% APY (!!!) checking account with First Robinson Savings Bank. Read through the fine print, and so far it seems pretty straight forward. The rewards are only on cash under $25,000 -- but that's ok, I'm not ready to save more than $25,000 in a checking account anyway. You do need direct deposit (I'll have to get my work account to switch over from my Bank of America - thank goodness I'm now a full time employee!), and you do need to make 10 transactions a month (I could buy gum ten times and that'd be fine.)

Some other banks are offering similar rates, more in the 5% range...

Union State Bank is offering 5.01% APY with similar rules and AmericaNet is offering 5.25% APY.

I'll admit, I'm a little nervous opening up a bank account at a small bank in some random Midwestern state (not that I have anything against the midwest!) but these rates might not be too good to be true, just too good to pass up.

Given that my Chase Freedom card rewards are about $20 a month, on month's I spend a lot, I figure I could probably make a similar amount in this checking account and not risk forgetting to pay my bills on time and getting hit with late fees.

From the fine print, it looks like if you fail to make your 10 transactions per month you just get only .25% apy for that month - so basically, you don't get any interest. But you can start over the next month.

Considering I barely ever use cash, my debit cards always get a lot of action. This sounds like a good way to earn at a good rate while also starting to exit Bank of America. Right now I have a checking account, savings account, and CD at BoA. If this 6.01% rate turns out to be legit, I'll move my CD over there once it expires, and possibly move the cash I've been saving at ING there too -- since it's only earning like, 2%.

Have any of you opened up / used one of these high interest checking accounts before? Any horror stories I or my readers should be aware of?



10 comments:

Fabulously Broke said...

That is AMAZING.

Wow. If only I lived in the States.

Anonymous said...

Great post. I like that you shared your experience with the Brain Trust, they are smart guys!

Anonymous said...

My checking account at Community Bank of NV (brick & mortar) pays 4.0% if you:
• have 1 direct deposit
• pay 1 online bill pay
• sign up for e-statements
• 10 debit transactions per month

I've had this account since September and it's like Christmas at the end of every month, getting all that interest in thanks for doing what I'd be doing anyway.

Emily said...

You can research and compare checking accounts using CheckingFinder (www.checkingfinder.com). Type in your zip and look at rates and requirements for high yield checking accounts at select community banks nationwide! They have online banking too. If you find an account you like, you can sign up for free. Community banks continue to offer higher yields on short term deposits to serve as economic engines.

Anonymous said...

These types of accounts are legit. I find them wonderful to use, and open multiple "Rewards Checking" accounts at a single bank, if allowed. But the rates can fall. I am currently moving my $$ because the bank that was paying 4.61% (up to $50,000) dropped it to 1.24%. However, I found another that pays 5.25% up to $25,000. Not bad for these times!

Emily said...

P.s. I just realized it may not be clear from linking the URL in my name, but I posted on behalf of CheckingFinder. Just wanted to make it clear. :) Hope an additional source of research helps!

Emily (CheckingFinder)

Azahar said...

I found a great site that lists all different banks that offer up to 6% in reward checking. I found this tool helpful for me on CheckingFinder.com, the website describes what rules need to be followed, like to just to use the debit card, online banking, or use direct deposit.

I’ll pass it on:

Bank Rates:

First Robinson Savings Bank - Robinson, IL
6.01
Southern Missouri Bank & Trust
6.01
Bank of Ripley - Ripley, TN
5.26
Communication Federal Credit Union - OK
5.25
LA DOTD Federal Credit Union - Denham Spring, LA
5.25
Keystone Bank - Auburn, AL
5.15
Connexus Credit Union - Wausau, WI
5.15
Altra Federal Credit Union
5.05
Farmers and Merchants - Nashville, IL
5.05
Community State Bank - Poteau, OK
5.05
First State Bank - Kansas City, KS
5.03
State Employees Credit Union - Santa Fe, NM
5.02
Grand Bank of Texas - Grand Prairie, TX
5.02
Harbor Credit Union - Green Bay, WI
5.01
Malvern Federal Savings Bank - Paoli, PA
5.01
Union State Bank - Everest, KS
5.01
United National Bank - Cairo, GA
5.01
First Banking Center - Lake Geneva, WI
5.01
Noble Bank & Trust - Anniston, AL
5.01
The Community Bank - Brockton, MA
5.01
Bank of Little Rock - Little Rock, AR
5.01
Community Bank of Pleasant Hill - Pleasant Hill, MO
5.01
Community Bank of Raymore - Raymore, MO
5.01
Olmsted National Bank - Rochester, MN
5.01
Royal Banks of Missouri - St. Louis, MO
4.78
Texas Citizens Bank - Pasadena, TX
4.76
Courtesy of BancVue.

Enjoy!
~Azahar

Sandy said...

I linked over to your list here from my blog. I think you have the best listing of interest rates that I have seen in some time. If you're like me and don't have 10K to invest in a CD then these are the best rates that many of us will see on our money.

Anonymous said...

Hello,
If any one is a teacher out there, California Credit Union offers a summer saver program with monthly deposit over 300.00 and you earn 6%. (It is like a ten month cd in that they hold the money for the ten months.) Regular savings account though is .25%.

https://www.californiacu.org/educators/summer_savings.html

Anonymous said...

Coulee Bank offers 5.01% on their nationwide rewards checking. Free at http://www.CouleeBank.net

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