The banks in this country have had a long history of making profits off of us by charging fees for every little transaction - at the same time they pay us lousy deposit rates for the money we give to them to loan out and in turn earn their bank nice profits. A new banking product that has cropped up recently which may finally give us consumers a chance to strike back. The Reward Checking account is an account which pays a top-tier yield (currently as high as 6.25%) for accounts which met monthly requirements (in some case including using direct deposit, online bill payment, auto ACH debit, and/or receiving eletronic statements). The catch is that in many cases the yield only applies up to a certain deposit amount and if those monthly requirements are not met then the rate earned on the account is the type of paltry rate we are used to our banks paying us.

The banks are not in the habit of giving away money, they just don't think that the new banking customers that sign up for these accounts will have the diligence to set up their accounts correctly and in fact earn the 6.00% or better yields. But if everyone can get their financial house in order and set up a few auto-debits and online bill payments and give up their paper statements, then these banks are going to take a hit. Another factor is that the banks are not counting on their customers using these as investment accounts. They see these as typical $1,000 to $5,000 average monthly balance, high banking activity money-makers for their banks. Again, a little diligence and an investor can earn better than 6.00% by using a few of these banks and their Reward Checking programs in combination with one another. Now just where else are we going to earn 6.00% and be FDIC-insured or NCUA-insured???

I have opened three of these accounts by using the sites:

Money-Rates.com Reward Checking Page

and

Bank Deals

After about 90 days and maybe 2 calls to the participating banks with problems I have earned the top yield which among the three accounts averages 6.17% on about a $59,000 combined average monthly balance. The alternative from my own investment standpoint would have been a checking account earning 0.50% if I was lucky and a 90-day Treasury Bill with the remainder earnings close to 3.55%. Of course the U.S. Treasury Bill or a 90-day CD would not be liquid like my Reward checking accounts.

It has been made apparent that banks profit considerably when we use their check cards and debit cards. They also profit when they switch rates on us and confuse us with their myriad of fees. I am pleased to cut into their profit margins and take them for the 6.00% that they do no think I have the aptitude to earn.

Stay tuned for Sticking it to the Banks - Volume II

Regards