Earn the most with high-yield checking

Ink pen on check

It was only a few years ago that a new type of high-yield checking account cropped up. Reward checking accounts offered by small community banks and credit unions paid rates as high as 6% for banking online and meeting other requirements.

Now returns are more like 3%, and some banks have restricted how much you can deposit and still earn the top rate. This amount, called the rate cap, can range between $10,000 and $50,000.

Despite the changes, savers might find they can grow their nest egg faster if they utilize a reward checking account.

Don’t forget that 3% is still more than you can make with the top-paying certificates of deposit, savings accounts or money market accounts. And most passbook checking accounts are paying close to 0%.

Reward checking accounts offer more advantages than just the high rates. For one thing, going online with your banking can make money management easier. It's also great for the environment.

In addition, many reward checking accounts reimburse customers up to $20 or $25 in fees they incur when using other banks' ATM machines. That allows you to tap the most convenient ATMs for cash eight to 10 times a month.

But reward checking accounts are not investments that you sign up for and forget. To earn the highest rates you have to meet their rules and completely change the way you bank.

To qualify for the high interest rate and free ATM use, you must:

Fail to do any of those things and your interest rate will drop to something like 0.10% APY for the month and you'll have to pay all of the ATM fees you incurred.

So, is a rewards account right for you? It might be, if:

Still interested? Great.

Start shopping around. You want an account that offers a good rate and a high cap on how much money can earn that rate.

Take a pass on accounts that want you to make more 15 debit card purchases or more a month, but give extra credit to those that will reimburse you for an unlimited number of ATM transactions.

If you plan to park a lot of cash in your rewards checking account, you will want to find an account that pays a decent rate past the rate cap. This way you can use your account in place of a savings account or a short-term CD to maximize your earnings.

So where are the best rates on reward checking accounts today?

If you like the idea of keeping your money with a nearby institution, many small banks and credit unions offer high-yield checking accounts to local residents. A couple of 4% and 5% reward checking deals are still available in local markets. If you are lucky, you may find one of these great deals in your city.

Bankaholic is a great place to start to your search. It's always watching out for the best local rate deals.

There are also banks that welcome applications from savers regardless of where they live. A few of these banks are paying more than 3% on their reward checking account.

Danversbank offers a 3.01% APY on balances up to $25,000 with ATM fees refunded worldwide and Atlantic Coast Bank pays a 3.01% APY on checking account balances up to $15,000 with ATM charges up to $25 per cycle refundable.

To earn their highest yield, Danvers Bank requires that you make at least 12 debit card transactions a month, receive electronic statements, access online banking and have a recurring deposit.

Atlantic Coast Bank requires 10 debit card purchases per month along with electronic statements and either direct deposit or automatic payments. The 3.01% yield applies to balances up to $15,000, after which the yield drops to 0.75%.

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