High Yield Checking Accounts

In hopes of getting people to add more money in their accounts, you are seeing an increasing trend of local banks creating High Yield Checking Accounts, also referred to as Reward Checking Accounts.

A High Yield Checking Account is pretty much the same as a regular checking account, but it tends to offer a very high interest rate if you meet certain criteria each month.

For example, I currently have a High Yield Checking Account with my local bank. I am earning 5% interest on my balance (up to $100,000) if I do the following every month:

• Use my debit card for 10 purchases (not ATM withdrawals)
• Have at least 1 direct deposit
• Receive my statement electronically

If I don’t meet those requirements the APY becomes .05%. So you can see that it is important that each month I don’t miss out on the 5%.

Since I have direct deposit of my paycheck and get my statement via their online banking interface. The only real challenge for me to meet the requirements is the 10 debit card purchases a month. There are many ways to do this easily, such as pay your cell phone bill online 10 times for small amounts. By 10 $.99 MP3’s from Itunes or Amazon.com

The thought behind all of this is that it is cheaper for the banks if you use your debit card rather then checks. You can still use checks but I think they think they you will tend to use the debit card more once you get used to it. It also saves the banks quite a bit by not having to mail out statements to everyone as well.

Since I opened this account, I don’t even use my savings account anymore since 5% APY is higher than any savings account that I can find. Most large banks like Chase, Bank of America, etc do not offer these. They still trap you in with the $50 bonuses then just give you < 1% on your money. If you are interested, check with the small local banks in your area, these accounts are popping up all over and you are bound to find one.

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