bank rates

The Luster Dims For High-Yield Checking

Less than two weeks ago, five banks were paying more than 4% on nationally available high-yield checking accounts.

Now there are two – AmericaNet Bank and Evantage Bank – and they offer 4.00% APY on just the first $10,000 in the account, not the $25,000 they once did.Only two banks are still paying 4% on nationally avaiable high-yield or reward checking accounts.

Less than two weeks ago we were cautiously optimistic that high-yield or reward checking accounts would continue to be one of the best and most exciting new ways to save.

Now we have to wonder if the interest rates and limits are becoming so low that savers will decide they just aren’t worth the hassle, and begin to turn away.

Here’s what happened to the other three banks at the top of our rankings of the best high-yield checking accounts since Sept. 22:

  • Danversbank in Boston reduced its return from 4.01% APY to 3.01% APY on the first $25,000 in the account.
  • First Clover Leaf Bank in Edwardsville, Ill., cut the rate on its My Great Rate Checking from 4.01% APY to 3.85% APY and reduced the balance on which you can earn that rate from $25,000 to $15,000.
  • Capital Bank is still paying 4.01% APY on the first $10,000 in one of its Smart Checking accounts, but has limited new applications to North Carolina residents.

Those are still good rates in this horrible market for consumer savings.

But these are not investments you can sign up for and forget. You must make 10 to 15 debit card purchases each month, and arrange at least one electronic bill payment or direct deposit.

If you’re unfamiliar with how these accounts work, “The ABCs of High-Yield Checking Accounts” will explain all of the rules.
Eighteen months ago several banks paid upward of 5.0% on nationally available rewards checking accounts, and they were immensely popular.

With these rates and terms, I suspect they’re going to be significantly less popular.

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Comments (3)
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3 Existing Comments
  1. wyle.coyote said:
    on October 5th at 10:23 pm

    Viewpoint still offers 4.01%, but the limit is dropping from $50k to $25k on 1 Nov. They’ve also recently limited eligibility to residents of Texas. I agree about the lost luster. A demand note program that I’m in pays 2.25% on unlimited(?) funds with no hoops to jump through, but its not covered by FDIC.

  2. Tracy said:
    on October 7th at 05:09 pm

    AmericaNet Bank and Evantage are dropping to 3.75% next month for rewards checking, and 1.75% for the money market account. I agree these rates are not great, but at least the caps remain the same.

  3. Monique said:
    on October 16th at 06:15 pm

    I just applied both banks. Both declined my application!
    Their explanation was “due to too many inquiries”. So what?
    I just bought a house and trying to manage my finance. I need to look for better rate for my cash to stay safe.
    Yes, I have 10 other banks account, but I have great credit score.
    Just wanted to update…