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November 29, 2010

3% Interest on Checking? Don’t Bank On It!

Filed under: Finance — Edgar (aka MrConsumer) @ 5:41 am

With so many bank accounts paying “bupkis” (almost nothing) according to comedian Jerry Stiller in Capital One commercials, this bank’s ad looked really promising.  They pay an enticing  3.01% interest on checking, and charge no fees at any ATM in the country.

What’s the catch?

*MOUSE PRINT:

Ah, if there were only one catch… but there are many buried in that ureadable footnote that appears to be printed in four point type.

– There is a limit of $25,000, higher amounts earn only 0.25%
– If you don’t follow all the rules/requirements, your rate drops to 0.25%
– You must make at 12 debit card transactions per month, not including ATM
– You must have direct deposit or have a recurring ACH transaction
– You must get your statement electronically
– You must access online banking at least once per month
– If you don’t follow the rules, you will not be reimbursed for ATM fees

All these requirements are likely to trip up all but the most diligent consumer, and will result in an account that really pays “bupkis”.

Accounts like this are called rewards checking, and can be found at various banks around the country. Because the nature of these accounts is so different from the traditional checking accounts we are all used to, banks need to more clearly disclose the unique requirements in order to actually receive the high rate of interest advertised.

• • •

10 Comments

  1. And I fail to see their logic. I put my money in there for them to use/loan out, but if I don’t make a minimum of 13 transactions, most of which could be assumed to be withdrawals, I get penalized? Seems to me they should be happier that I just leave the funds in there for them to make more of it with. Makes as much sense to me as our postal service continually offering priority mail at cheaper rates than parcel post and then crying they are losing money. I’m obviously not cut out to be a business mogul — too late anyway. :-)

    Comment by Bob — November 29, 2010 @ 8:10 am
  2. Bob, they make you do the 12 debit card transactions because they make 3% to 4% per transaction from the retailer on the purchase.

    Comment by John — November 29, 2010 @ 10:20 am
  3. I use them and have no real issue with following “the rules”. This is my third bank doing this; starting off at 5% interest and continually lowered. I chose Danversbank because I could keep $25,000, instead of only $10,000. I’m making approximately $50 a month in interest and its worth the extra thought to do so. Nowhere else am I guaranteed this kind of secure dividend.

    Comment by Mina Parlin Seegers — November 29, 2010 @ 11:00 am
  4. I would have no problem following all those rules. I’ve done it with all sorts of other offers from banks. If you’re a die-hard fan of getting “something for nothing”, it just comes naturally.

    Comment by Arnold Semmons — November 29, 2010 @ 3:59 pm
  5. I would have no problems with the requirements, except, do the twelve transactions include using my debit card as a credit card? I prefer not to enter PIN numbers.

    Edgar replies: The bank makes more money if you choose “credit” when using a debit card, so I wouldn’t be surprised to discover that this bank requires you to make 12 signature-based transactions.

    Comment by Bob — November 29, 2010 @ 11:47 pm
  6. I use mybanktracker for these bank bonuses, they usually give you the fine print catches too. This year I’ve opened 4 new banks and collected over $300.

    Comment by Kyle — November 30, 2010 @ 5:54 pm
  7. If the bank is so proud of their program, why do they post the footnote in 4 point type? Some of us have trouble reading type that small. At least, I assume it was in black ink. I saw a disclaimer one in super small type printed in yellow ink on white paper. I don’t think they wanted it to be read.

    Comment by John — December 1, 2010 @ 7:00 pm
  8. My credit union has pretty much the exact same conditions on interest checking. The debit transactions can be PIN or credit. I haven’t been tripped up by the rules once in two years. So not really a problem, and a pretty good return. I do get a monthy mail that lets me know if I haven’t qualified before the month’s up (or have, of course).

    Comment by Russ — December 2, 2010 @ 6:14 am
  9. Just remember:
    All advertising is deliberately misleading, and professionally designed to seperate you from your money.

    Since they’re the pros, better read the fine print where the “gotcha’s” are hidden. So get a magnifying glass or prepare for the rip-off.

    Comment by W.L. Head — January 3, 2011 @ 11:37 am
  10. I suppose their mistake was burying it in fine print. These aren’t hard things. Most Americans meet these in a week without even trying let alone a whole month.

    Many community banks offer similar programs. And smartly, they don’t bury the qualifiers.

    As for the complaint that there’s a cap for the high interest at $25K. Remember, this is a checking account. Not a retirement plan. They have to do that or else smart people with money would put $100K here instead of in a CD. These returns are higher than CDs and funds aren’t locked.

    Comment by Dante — May 5, 2011 @ 10:06 am

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