I haven’t been much of a interest rate-chaser recently, and it feels like it’s been a while since I’ve opened up a new bank account. For one, I already have a lot of my cash tied up in CDs and I-Bonds. Also, most of my recent cashflow has been going into 401k and IRA contributions.
Now that I have a bit more free time, I decided to open up a new “Rewards Checking” account at Evantage Bank. It offers 5.25% APY on the first $10,000 in balances, and 2.25% APY for anything over that if you meet their requirements of electronic statements and 10 debit card purchases per month. I liked it because it was available nationwide, there were no minimum balance requirements, and didn’t have a direct deposit requirement.
In addition, they have a “Mega Money Market” savings account that is currently paying 3.10% APY on balances to $35,000. (No debit requirements.) So you could keep a total of $45,000 parked at Evantage at a combined interest rate of 3.58%. Not too shabby in this current environment. Alternatively, you could open a second Rewards Checking account and get another $10k at 5.25% (but also with another 10-purchase commitment).
So far, the account application was run by CashEdge, with the usual informational requests and ID verification using questions based on your credit report. The process was completely online, with both online signature cards and an ACH transfer option for initial deposit. I’ll provide a better update once I get started.
I’ve written about rewards checking accounts in the past. They are a gamble and you can earn very little interest if you don’t pay attention to the requirements. In addition, the rates can drop quickly. Look at your own habits, and hopefully these rates will stay competitive for a while.
Evantage is one of identical triplet banks, along with Redneck Bank and AmericaNetBank, which are all owned by the Huckabay family of Oklahoma. The three banks reportedly have different gimmicks to attract publicity – supposedly the redneck, patriot, and high-tech crowd? Apparently it worked, because Redneck Bank isn’t even taking new applications as of yesterday.
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I don’t have 10 transactions a month though…..and the thought of buying a cent of gas or whatever 10 times seem so unappealing. I think I’ll pass.
As someone who has a minimal knowledge of finances,
Why would they give a higher rate on a checking account then their money market account?
Greg, I hope this helps: If you do not meet each and every requirement that they specify, the interest rate falls to paltry 0.1% to 1.0%. They are essentially betting that you will be lax and they won’t have to shell the high rate of interest. Moreover, the debit card transactions generate lots of fees for the bank. Actually the whole clearing house and the rewards checking account along with the website backend is marketed by BancVue (http://www.bancvue.com) to small community banks and credit unions. These smalls banks have to pay a small fee to get all this plus the account helps maintain banking relationship with customers who would otherwise put the money into an online savings account.
Several banks have “reward” checking accounts which give higher rates only if certain requirements are met. This usually includes X number of debit card transactions (of which a portion of the merchant fee is paid to the bank) and other requirements trying to get customers to actively utilize the bank and become a profitable customer in the long-term.
The “rewards” checking system was created and sold to banks as system that would return more profit than what they were paying out in interest.
1) It’s usually only the first 10,000-35,000 that gets the higher interest (but you can have multiple accounts).
2) For the average person, they will likely use their bank card to make purchases since there is a requirement that a direct deposit be made into the account. The average person probably lives pay check to pay check and will not have a large balance.
So if I open a money market account, do I also have to open a checking account? I’m confused since you have an option for a debit card to withdraw funds. Not really sure how that would work with a MMA. I’m I just over thinking this? Thanks.
I would never sign up for something that requires a fulfillment obligation each month. Do you really want to be keeping track of your 10 transactions/month? Kind of a hassle.
I looked at this and decided it would not be worth all the extra hoops I’d have to jump through to net an extra $25 a month.
ShorebankDirect today dropped their newly dropped interest rate from 2.80% to 2.45%, it was 3.05% about aq moth ago, I think chasing rates is now a failed policy.
reward checking is cool. i have 4 $50,000 accounts. better than getting 1%. $7000 a year is worth the trouble.
I’ve been thinking about opening an account at one of these three banks myself, but I’ve been hearing of possible pitfalls: 1) No transfering money in or out until 30 days after the account has been opened, (don’t know how true that one is) and 2) a transfer limit of $1500 per day (appears to be confirmed on their website). If you wanted to move my money to someplace with a higher rate later on, would you be able to do it easily enough? It does say you could ask for a higher limit if you needed a larger transfer, but who’s to say they’d say yes?
the places i bank at have no such restrictions. i’m completely liquid.
Jonathan, I have a question: where do you find these banks? Seriously, what are your sources? I am pretty much looking at bankrate.com but I do not see this bank there.
Some banks have restrictions on transfers initiated on their end by their systems, but I don’t know of any that have restrictions on transfers initiated by external banks.
You just need an external bank that “pulls” or “pushes” into one of these banks for free when you need to move money. Lots of places do that, from Fidelity to Vanguard to FNBO Direct to WaMu/Chase. Bank of America charges a fee to push money to an external bank, but pulling money into BofA is free.
I agree that for many people the extra hassle of these types of accounts won’t be worth it. It’s up to the individual to decide based on their own situation. I am doing this partially out of curiosity.
Did you guys have any experience with Alliant Credit Union? Is it good? Thnaks!
I signed up for the 3.1% account yesterday (the other one is definitely not worth the hassle). Jonathan, are you saying that we cannot initiate any transfers from the Evantage site (or only for the first 30 days)? Also, I called them and asked if they allow 3rd party debits. They said they did. Did you hear that also?
I’m not sure about the 30-day in-house restriction thing, but I’m sure we can still use third-party debits.
I agree, if things get to be a hassle, I’ll just stick with the MMMA.
Personally, I don’t have a problem making the transactions. I purchase everything under $10 with my bank credit card.
I signed up with Redneck bank a few weeks ago. There are a couple of comments I’d like to address.
Debit transactions: I have initiated monthly donations to charity (I did this online using my debit card). It requires a little research, but you can find charities that will accept $1.00 donations. Best of all, you know that you will always meet the minimum requirements.
MMA: Its nice, but are restricted to 6 transactions a month for these banks, not the most flexible MMA.
Transfering money: Its true that you can’t do this the first 30 days- but I doubt you would really be moving money the 1st 30 days anyway since the acount was opened to get a better interest if you move it you loose it. After 30 days, you must have a minimum monthly deposit of $400 to maintain this feature. You could call and ask for an increase in your limit, if they deny you, you could ask for an increase in the amount that you are able to withdraw via ATM. And you also have the option of requesting checks ($12 for carbon copies) and deposit this check to the account you’d like to transfer funds.
The charity donations is an interesting idea. Otherwise I don’t make the necessary number of transactions on a normal basis for the checking account.
The MMA is more attractive for someone like me, however I have my money in Smartypig.com right now and they are still at 3.05% APY. The difference is not enough to move it.
Dee,
So in the first 30 days if I try to send money from one of my other accounts (ie Bank of Amerca) will the transfer will be rejected?
Also, for transferring money what feature are you talking about that you need to have at least a $400 deposit every month to maintain?
When you initiate transfers to and from the account how long do they normally take?
Eric,
If you push money into the account it will not be rejected. I used WaMu to send money to Redneck. It took about 4 days.
I was mistaken about the $400 deposit requirement for transfers; $400/mo deposit is actually the requirement to qualify for overdraft protection. For transfers it only says that you must have a debit card and that it is a discretionary service. I’m a little shy of 30 days, I will post my transfer experience once I’ve tried it out.
I considered rewards checking, but their transaction requirement is too much hustle for me. I don’t make that many transactions a month. Plus, I wouldn’t want to constantly carry and use the debit card that is linked to the same checking account where my paycheck is deposited. Credit cards seem safer to carry around, and I make fewer than 10 transactions a month with my CC. Besides, I have so many automatic payments from my checking now that changing to another checking is too much of a hustle.
MMA is interesting. I currently have 3.5% in my local branch of M&T bank, but this was a promotional rate due to expire in less than a month.
I decided to go for this deal. I’ve got some bank accounts I want to close (WaMu/Chase), so I was ready for something different. I completed the application, but it’s still pending. Weird thing is, when they asked the security questions for my husband and myself, the answer to every one was “none of the above”. It’s like they didn’t even get any information from the credit bureaus.
I opened both accounts, so when they are open I will be calling to find out about the transfer and withdrawal policies. I read all the fine print, but I do have some questions.
I am willing to go to a little extra trouble to complete the 10 debits for that kind of interest. Most of my money is sitting in the now pathetic Dollar Savings Direct.
I signed up for Evantage and my trial deposits (and matching withdrawal) came through 8 days ago. My opening deposit ($1.00) has still not been withdrawn from my other bank account and my Evantage account has still not been opened (as far as I know). How has everyone else’s experience gone so far?
It’s been 9 days for me. My opening deposits were taken out of my BoA account 2 days ago, but didn’t show up in the Evantage account until today. I have called them a few times, asking questions about debit and transfer withdrawals. They sent me a secure message through their website telling me my account numbers, so I called and found out what their routing number is. I am already getting set up to be able to “push and pull” money from the account, since their limits are so strangely limited. My debit cards are supposed to be on their way, and I ordered checks today just in case I need a large amount of money all of a sudden.
One thing…go back to your application and make sure all of it is completed. When I thought I was done, I went back to the app and found out I needed to complete more info for it to be finished.
If nothing has changed by Monday, I would call them and ask.
Also, you kind of have to jump through hoops to get your account registered to where you can sign on and see the transactions.
Let me know how it goes.
Rhonda,
Are are you talking about the Mega Money market account? That’s the one I opened. It’s too late for me to call now. They close at 8 Eastern. I will call on Monday if the money is still not deducted. This is what it says for mine when I go to application status:
Your Decision Details We have received your application and are reviewing it. We will contact you with a decision via email.
Tax Certification And Signature Card Complete
Funding Status We are ready to fund your account as soon as we finish processing your application.
So it doesn’t seem like I missed anything. How long after you verified the trial deposits did the opening deposit get taken out of B of A? Also, what do you mean by “their limits are so strangely limited”?
Eric,
I opened the checking and Mega Money market accounts. It took longer than expected after I verified my trial deposits for anything else to happen. They will send you an email, where you have to log on to your application or site in order to read it, and it will give you your account number. It will still take a few days after than before you can do anything further. Also, it shows that my initial deposit is in my checking account, but not in the Mega Money. Strange since they were both coming out of the same BoA account, and were deducted 2 days ago.
From what your application says, you will see some action by early next week.
Except for writing a check, your limits are $1500 per day for ACH transactions, or $600 for debit card use (I think ATM’s are $300). That means IN or OUT. In other words, using their system, you can’t put in or take out more than $1500 per day using their transfer system.
Since I have talked to them several times, I now understand that if you use another financial institution to send money to them or take it out, they will honor that, no matter what the amount. I have an Etrade account to “take or put” money into or out of Evantage accounts with no limits. WaMu will also work, but takes longer.
In other words, if you intend to put more than $1500 per day into Evantage (or take it out), you need to use another bank account that doesn’t have those kinds of limits, and send or take out from there. I was very confused when I talked to Evantage, because I had never heard of such a thing, but that’s their rules.
I’m still willing to give it a try because of those interest rates.
Rhonda,
I called Evantage tonight. I had to wait on hold for 30 minutes before someone came on. The guy said that everything was in order but no one had finalized my application which is what he did. He said I should receive my account # within a few days (if I hadn’t called maybe I would never have received it). He also told me that even if I use another bank to initiate a transfer it would still take 3-5 days, which is outrageous. Have you heard this too? I will still give it a try but if transfers really take that long and the customer service is this bad I don’t think I will be using it for long.
Eric,
Since I opened both the checking and mega money accounts, I have had different experences. My checking account was funded a few days ago, and my mega money account has yet to show a balance. I haven’t called them, thinking that it would appear in the next few days, but I am starting to wonder. I will call them tomorrow and find out why both accounts haven’t been funded. Both accounts were funded by the same external bank, so I don’t see why they wouldn’t be funded at the same time.
I’m thinking about putting a large amount of money (for me) into these accounts, so I would hope that things straighten out very soon.
WaMu is another one that takes days to even initiate a transfer. It’s been quite an inconvenience, and not worth the trouble. I’m getting ready to close down my WaMu accounts because the transfers aren’t instant. Also, the switch to Chase has crashed the interest rates on savings.
Thanks for your update. Let’s keep in touch.
Rhonda
Mine is all opened, but I did have to e-mail them to “finalize” my application as well. I am just waiting for the debit card so I can start making my required purchases. Anyone have any idea how long that will take?
I got my debit cards today, but still no deposit into my mega money account. I can use it with my checking account, but I’m not sure why the money hasn’t come through for the MMA.
You don’t need the debit card right away. Typically they give you the full interest rate for the first statement cycle for free – meaning that you don’t have to meet the requirements of the 10 (or 12 or 15) transactions until the next statement cycle (sometimes starts the 4th and ends the 3rd of each month, or 2nd Wednesday to 2nd Wednesday, etc.).
also, there are many ways to meet the requirements: go to the self checkout aisle at the grocery store and ring up items one by one, or use it at the places that don’t take your rewards program credit cards (Discover and Costco AMEX for me), or use it to make incremental $1 payments to your cell phone bill online.
Too good to last…
At least I got me a free beer koozie… 🙂
Jonathan, I got the same letter from AmericaNet Bank today….
I think it’s safe to assume Redneck Bank will reprice on May 5th too.
What a joke that bank is. First they have lousy customer service and now the lowering of the rate before my account is even opened. I think it’s safe to say I won’t be keeping this account for long. Kevin does that actually work what you do? 10 $1 purchases? I’m surprised the bank isn’t smart enough to guard against that loophole. Even if it does work it seems kind of ridiculous (and embarrassing) to do that but to each his own.
after reviewing my application for a checking and Mega Money Market, they came up with a lame excuse not opening accounts. Beware of EVANTAGE bank, they are not worth your time. Rick
Eric – It depends on the Bank offering the program, but I just got off the phone with Evantage Bank and they confirmed that there is no minimum purchase requirement. You could make 10 different 1 cent transactions if you wanted to.
I have a Rewards checking account with Community Bank of Pleasant Hill. Typically in a month my wife goes to Albertsons and rings up 7-8 different items separately that are usually $1.50 to a $1.75 each. Then we use the card at places that don’t take AMEX or Discover, like a $10 co-pay at the doctor’s office and 2 trips to In-N-Out and that takes care of the 10 transactions requirement for the month. However, CBPH has decreased their rate from 6.1% down to 3% in 5 months, so even though Evantage just dropped their rate, I may still start an account with them because their prior rate of 5.25% was consistent for 2 years.
Is anyone still using this bank? I quit the bank a while ago when they lowered their rate as soon as I signed up. I just went to the bank’s site and see that they are still offering 2% (which is better than my other banks). Is it worth getting an account again?
Yep, still using them because I never got around closing the account, now they have some of the highest interest rates out there (Checking/MMarket). They still have the ugliest user interface though.
-Rick