For someone whose job it is to stay on top of innovations in financial services, I hate to admit I'm late to the party on the so-called "reward checking" phenomena. Last year, I'd noticed a number of smaller financial institutions launching high-yield checking accounts, but I hadn't realized it was a national trend primarily powered by a single bank tech supplier, Austin, Texas-based BancVue (see note 1).
According to a November BankRate article, more than 350 U.S. banks and credit unions now offer so-called "reward checking accounts" powered by BancVue with 30 new ones coming on board each month. These checking accounts usually pay high rates of interest, typically 6%, if users meet high levels of electronic banking activity each month.
Typical requirements to earn the high yield:
- 10 to 12 debit card transactions each month
- Electronic statements (no paper)
- Online banking usage
Typically, the following benefits are paid ONLY when the above requirements are met:
- 5% to 6% interest on the first $25,000 to $40,000 in balances
- ATM refunds up to $10 to $15/mo
And most seem to include:
- No monthly fees regardless of activity or balance levels, so the account can be marketed as "free"
Marketing
Another distinguishing characteristic of these accounts is the innovative marketing and website design. With the help of BancVue, smaller banks and credit unions are able to offer a level of design and pizzazz that meets or exceeds the typical megabank high-budget program.
Here are some of the more interesting BancVue-powered programs we've looked at (screenshots follow):
- Velocity Checking <velocitychecking.com> from Seattle's Verity Credit Union
Earn 6.01% on balances up to $40,000 and receive ATM refunds up to $25 when meeting the following monthly requirements:
– 12 debit transactions
– 1 online banking login
– electronic statement in lieu of paper - Turbo Checking <turbochecking.com> from New Mexico's Charter Bank
Earn 6.01% on balances up to $25,000 and ATM refunds when meeting the following monthly requirements:
– 10 debit transactions
– receipt of 1 direct payroll deposit or other automated ACH deposit
– 1 login to online banking
– electronic statement in lieu of paper
And our favorite, which substitutes iTunes downloads for the high-yield benefit:
- FreeTunes Checking <freetuneschecking.com> from Oregon Community Credit Union (see note 2)
Earns 4 free iTunes downloads each month provided the following are met:
– 12 debit transactions
– 1 login to online banking
– electronic statement in lieu of paper
Screenshots
Velocity Checking from Verity Credit Union
Turbo Checking from Charter Bank
FreeTunes Checking from Oregon Community Credit Union
Notes:
1. I began researching this area after reading Verity Credit Union CMO Shari Storm's recent blog post (here) about how she'd changed her payments behavior to make the 12 monthly debits required for its Velocity Checking.
2. Oregon Community Credit Union also offers a high-yield version, Remarkable Checking, that substitutes a 5.05% APY on all checking account balances instead of the free music. Monthly account requirements are the same.
