NEW YORK (3/24/10)--Consumers are looking for ways to boost their interest earnings in a low-rate environment, and credit unions might consider offering rewards checking accounts. Bankrate.comprojects the accounts will be a more popular option for deposits in coming years. "Rewards checking accounts offer very compelling yields, so long as consumers are able to meet each of the account requirements each month, said Greg McBride, senior financial analyst for Bankrate, which announced results of its first annual 2010 Rewards Checking Survey. The average annual percentage yield (APY) for rewards checking accounts has maxed out at 3.3%, according to the study. The survey examines what to expect if opening a rewards checking account from a credit union or bank and what to look for to make sure the account gets the maximum yield. Credit unions will want to take note what others are doing in the field. Other findings:
* The average default APY if the account holder does not keep up with the minimum requirements was 0.16%, a significant drop off, said Bankrate. * The balance cap for earning the high APY was, most commonly, $25,000. * Of the accounts surveyed, 95% required the account holder to make a certain number of debit card transactions month to receive the highest APY. The average number of debit card transactions required was 11, but the most common requirement was 10 per month. * Roughly 91% of the rewards checking accounts have requirements for direct deposit and/or bill pay, but 48% require only one or the other, not both. One direct deposit per month is the standard requirement. * About 35% demand a mandatory bill pay requirement, ranging from logging in to as many as four bill payments per month; however, one bill payment per month is the most common requirement.
The study surved more than 211 banks and credit unions across the nation.