3% to 4% on Checking???

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3% to 4% on Checking???

Postby burnsh » Mon Feb 11, 2013 3:29 pm

Just read this on NBC.

"Imagine if you could earn 3 or 4 percent interest on a “free” checking account – with no minimum balance requirement, no monthly fees and free transactions at any ATM in the country?

Advertise | AdChoices
It sounds too good to be true, but it’s not.

The Kasasa checking account (pronounced kah-sah-suh) offered by dozens of community banks and credit unions across the country is for real. Right now, 29 of these institutions are paying 3 to 4 percent APY to those who qualify. "

http://www.nbcnews.com/business/better- ... -1B8310118
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Re: 3% to 4% on Checking???

Postby SSSS » Mon Feb 11, 2013 3:46 pm

Rewards Checking has been common knowledge for a long time. The account terms have been getting progressively worse over the past couple years. They typically require 10-12 debit card transactions per month, and there's always a maximum balance limit (usually $5,000 - $25,000) above which you will only get a nominal interest rate. So you really shouldn't look at the percentage rate, you should look at what the actual dollar payout would be and decide if it's worth jumping through the hoops. For example, if you're essentially capped at $30/month, you have to ask yourself if it's worth the hassle of meeting the debit card requirement (and giving up on credit card rewards for those transactions).

The terms change very frequently on these accounts. For example, I opened one and it went through the following transitions over a year:

1. 5% on $25,000; 1% above $25,000.
2. 4% on $25,000; 1% above $25,000.
3. 4% on $15,000; 1% above $15,000.
4. 3% on $15,000; 0.25% above $15,000.

Change 4 was the worst, as I now have to try to keep the account AT $15,000 but not much over. Given that money above $15,000 would now be better off at ING or Ally, the account is essentially capped at $37.50 interest per month, and I'm also losing about $4.50 in credit card rewards on the debit card transactions, so that effectively brings it down to $33/month. I'm seriously considering dropping it.

Keep in mind that you typically have inferior fraud protection with a debit card compared to a credit card.

And yes, this is a Kasasa account, but there are a ton of Rewards Checking providers and they all work basically the same way. Expect the terms to change for the worse every few months.
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Re: 3% to 4% on Checking???

Postby mikep » Tue Feb 12, 2013 1:20 am

Hmm .. I wonder if I could just buy 15 1 cent amazon gift cards with their debit card to meet the requirement, etc.. interesting. Does anyone with a reward account do this?
Also keep in mind credit card rewards are not taxable but bank interest is taxable.
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Re: 3% to 4% on Checking???

Postby SSSS » Tue Feb 12, 2013 6:39 am

mikep wrote:Hmm .. I wonder if I could just buy 15 1 cent amazon gift cards with their debit card to meet the requirement, etc.. interesting. Does anyone with a reward account do this?


Yes, people do things like that, and it's probably one of the reasons why the terms of these accounts (interest rate, maximum balance, interest rate above maximum balance) tend to deteriorate rapidly.
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Re: 3% to 4% on Checking???

Postby soaring » Tue Feb 12, 2013 8:08 am

Try this link for rewards checking accounts available around the country including Kasasa. Many different banks have the "kasasa" system of rewards. Did it once with Kasasa but too many changes reducing % and yes using debit cards are an issue for me too.

also search here for CD rates and more.
http://www.depositaccounts.com/checking ... Apy%20desc
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Re: 3% to 4% on Checking???

Postby john94549 » Tue Feb 12, 2013 8:59 am

As with any financial product, make sure you understand all the terms and conditions before signing up. I suspect if you think of a short-cut (multiple miniscule purchases, for example, all at the same place, on the same day), somebody has already tried it. I recall, some months back, chatter over at Ken Tumin's blog about "minimum amount" requirements, both for purchases and direct deposits. Folks were also complaining about periodicity of purchases (as in, "I used the card 15 times in September, but they say it was 13 in September, and 17 in October"). Is the purchase periodicity based on a calendar month, a billing cycle, or something else?

I sort of chuckled when RCA first came out, and folks were bragging about opening ten different RCAs with ten different banks/CUs. It was akin to "extreme couponing". But, I must admit, some had fun while it lasted. I hate using plastic, so I never participated. But some did, and scooped up some tasty interest rates.
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Re: 3% to 4% on Checking???

Postby SSSS » Tue Feb 12, 2013 10:08 am

john94549 wrote:Folks were also complaining about periodicity of purchases (as in, "I used the card 15 times in September, but they say it was 13 in September, and 17 in October"). Is the purchase periodicity based on a calendar month, a billing cycle, or something else?


I start using my debit card on the first of the month, then after 10-11 transactions (3-5 days), verify that both the transaction date & clearing date show the current month. The requirement is 12 transactions per month, but I've got 3 auto-transactions towards the middle of the month, so I should end up with 13-14 (good to have a safety margin). Doing transactions near the end of the month could be problematic. I can't speak for others, but I've never had an unqualified month.

But the next time the terms of the account change, I'm dropping it. It's at the point where it's just barely worth the effort.
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Re: 3% to 4% on Checking???

Postby bigspender » Tue Feb 12, 2013 10:11 am

I guess if you can make small varying amounts on an amazon gift cards it could be a good deal. But you need the direct deposit and it is a pain to always be changing where I do my direct deposit. So once direct deposit is required the deal is off.
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Re: 3% to 4% on Checking???

Postby Bogle101 » Tue Feb 12, 2013 11:02 am

"Keep in mind that you typically have inferior fraud protection with a debit card compared to a credit card."

Why would you consider the hassle of opening up a new account and meeting arbitrary requirements, with the above mentioned risk of inferior fraud protection, just for like 30 bucks? Doesn't seem worth it. I mean making small Amazon purchases every month for such a small amount of profit seems ridiculous.
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Re: 3% to 4% on Checking???

Postby SSSS » Tue Feb 12, 2013 11:44 am

Bogle101 wrote:"Keep in mind that you typically have inferior fraud protection with a debit card compared to a credit card."

Why would you consider the hassle of opening up a new account and meeting arbitrary requirements, with the above mentioned risk of inferior fraud protection, just for like 30 bucks? Doesn't seem worth it. I mean making small Amazon purchases every month for such a small amount of profit seems ridiculous.


Because it was originally more than $100/month, and they jack it down gradually.

Also, I don't do the Amazon thing; I just use the debit card in place of credit cards for my first ~10 minor purchases each month + 3 automatic transactions per month (newspaper, Netflix, and natural gas). So basically it just involves moving my debit card to the front of my wallet on the 1st, moving it back around the 4th or 5th, and logging in once to count/verify the transactions.

It's currently at about $39/month (really more like $30 when considering only "surplus" interest compared to Ally + lost credit card rewards), which is pretty much my break-even point for whether or not it's worth the trouble.
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Re: 3% to 4% on Checking???

Postby mike143 » Tue Feb 12, 2013 9:14 pm

mikep wrote:Hmm .. I wonder if I could just buy 15 1 cent amazon gift cards with their debit card to meet the requirement, etc.. interesting. Does anyone with a reward account do this?
Also keep in mind credit card rewards are not taxable but bank interest is taxable.

I think the minimum Amazon will do is $0.15.
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Re: 3% to 4% on Checking???

Postby hcrossing » Tue Feb 12, 2013 11:35 pm

I put in 3 to 4 cents of gas in my car when filling up. It takes a few minutes longer but I do this 3 - 4 times during each fill up and meet the 12 transactions needed and spend less than 50 cents to get my $37 per month.
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Re: 3% to 4% on Checking???

Postby mickcris » Wed Feb 13, 2013 1:19 am

mike143 wrote:
mikep wrote:Hmm .. I wonder if I could just buy 15 1 cent amazon gift cards with their debit card to meet the requirement, etc.. interesting. Does anyone with a reward account do this?
Also keep in mind credit card rewards are not taxable but bank interest is taxable.

I think the minimum Amazon will do is $0.15.


I have read that Amazon will possibly ban your account if you do this. Here is one example:
http://www.fatwallet.com/forums/deal-di ... #m17282869
Last edited by mickcris on Wed Feb 13, 2013 7:59 am, edited 1 time in total.
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Re: 3% to 4% on Checking???

Postby letsgobobby » Wed Feb 13, 2013 3:38 am

SSSS wrote:
Bogle101 wrote:"Keep in mind that you typically have inferior fraud protection with a debit card compared to a credit card."

Why would you consider the hassle of opening up a new account and meeting arbitrary requirements, with the above mentioned risk of inferior fraud protection, just for like 30 bucks? Doesn't seem worth it. I mean making small Amazon purchases every month for such a small amount of profit seems ridiculous.


Because it was originally more than $100/month, and they jack it down gradually.

Also, I don't do the Amazon thing; I just use the debit card in place of credit cards for my first ~10 minor purchases each month + 3 automatic transactions per month (newspaper, Netflix, and natural gas). So basically it just involves moving my debit card to the front of my wallet on the 1st, moving it back around the 4th or 5th, and logging in once to count/verify the transactions.

It's currently at about $39/month (really more like $30 when considering only "surplus" interest compared to Ally + lost credit card rewards), which is pretty much my break-even point for whether or not it's worth the trouble.

The two of us earn about $900 between our two different accounts. After taxes it is $600. The work is minimal. $600 is $600. Good place for an emergency fund.
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Re: 3% to 4% on Checking???

Postby runner9 » Wed Feb 13, 2013 7:30 am

mikep wrote:Hmm .. I wonder if I could just buy 15 1 cent amazon gift cards with their debit card to meet the requirement, etc.. interesting. Does anyone with a reward account do this?


We have to do 5 MC transactions a month to avoid savings account fees. Just paid 24 cents for a banana and 25 cents for another banana at the self checkout line last night :wink:
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Re: 3% to 4% on Checking???

Postby dsanders79 » Wed Feb 13, 2013 8:25 pm

I was looking for a place to stash my emergency fund so I researched this a few months ago. I ended up stashing $5000 of my emergency fund at Mango. It's got its drawbacks, but I can live with it since I hopefully won't need the money. I've only had it for a couple of months but so far it has been good. Here is a very good thread on it: http://www.bogleheads.org/forum/viewtopic.php?f=2&t=94135

Edit: I forgot to add that when I was contemplating some of these accounts, I thought about getting a Square https://squareup.com/. You'd pay the 2.75% on your transactions, but 10x $1 transactions per month only equals $3.30 a year. In the end I never tested this since I ended up going with Mango.
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Re: 3% to 4% on Checking???

Postby Littlefinger » Wed Feb 13, 2013 9:41 pm

I earn 4% on 25k. the best way to make the transaction requirements that i've found is to make multiple transactions on your internet/cable bill
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Re: 3% to 4% on Checking???

Postby AustenNut » Thu Feb 14, 2013 12:22 am

We got excited about this last year when we first found out. Went with an out-of-state credit union that gave 4.25% on the first 10k, and then maybe .50% after (can't remember exactly). About 7 months later it went down to 3.25% on $5k and something like .10% on everything above $5k. With the aggravation of dealing with a bank that wasn't local we switched to a local bank. We've been averaging about 1% on our entire checking balance. I think it's actually something like 2 or 2.5% on the first $25k and then .75% on everything after that, but we decided that it's better just to stick to with one place rather than hopping to and fro for the best deal, particularly when those banks keep changing the value of those deals.
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