Less than a week after updating my list of banks offering Rewards Checking I was applying to some of those same banks to open an account. Deseret First Credit Union had dropped their rate from 5% to 3% but Coulee Bank still maintains 5% (now 4%) on their rewards checking. I am now short one bank so I go in search of a better return. Join me in my over six week long odyssey as I attempt to sign-up with out of state banks in search of rewards.
Choosing a Bank
Looking over the list of banks, which has changed from a few weeks ago, I had eleven to choose from that were open to out of state residents:
- AmericaNet Bank
- Bank of Asheville
- Coulee Bank
- Evantage Bank
- First State Bank of Kansas City (eligibility recently restricted)
- Franklin Bank & Trust Company
- Heartland Community Bank
- Malvern Federal Savings Bank
- Noblebank & Trust, NA
- Union State Bank
- Valley Bank
I eliminated AmericaNet Bank and Evantage Bank because their high yield rate was only paid up to $10,000. This is much too low of a maximum so they are the first to be crossed off my list. Heartland Community Bank, Malvern Federal Savings Bank, and Union State Bank were put on hold because they have an additional requirement of one account access per month. This slight inconvenience could be offset by two of these banks’ higher maximums on which the first tier interest is paid. I already have an account with Coulee Bank with which I am receiving a decent rate, so strike them off the list. Franklin Bank & Trust Company, Noblebank & Trust, NA, and Valley Bank all require twelve transactions per month. This is a major disadvantage so they are out of the running.
Of the two remaining banks, First State Bank of Kansas City (eligibility recently restricted) Bank of Asheville both have, or appeared to have, confusing sign-up web pages. I decide to go with the former as it seems to be a tad clearer. Later I found the sign-up page at First State to be clearly posted, I just missed it the first time around.
The worst part of Rewards Checking is that in many cases you are dealing with a small bank that is new to signing up out-of-state customers over the Internet. As an example of a drawn out process read about Lee County Bank and Trust.
The time to sign up can be from two to four weeks, or even longer. With these small banks I found the process is very similar. If the bank does not drop its interest rate, it can be well worth the effort. If you have not gone through the process of opening an account with a small out-of-state bank, perhaps the best way for me to describe it is to keep a daily log. That way you can get a flavor of what to expect. I started with First State, then switched to Heartland, and then switched back to First State. While I have a 43 day log, the time from start to finish with First State was three weeks, which is about average. Enough said, here is my log:
Monday 30 March: Day 1 — At First State Bank of Kansas City I find an enrollment form for on-line banking on their website. It is not clear to me whether this is just for existing customers to begin accessing their accounts on-line or whether new applicants for rewards checking use the form also. It required name, address, phone, email, and social security number. The instructions are to wait to be contacted. There was no email confirming sign-up. Looking back a few days later, I discover this is the wrong place to sign-up and I see a link on the homepage of their site which brings up another page with a large “APPLY NOW” button.
Tuesday 31 March: Day 2 — Having received no communication from First State I send them an email asking what the next step is in the process of signing up.
Thursday 2 April: Day 4 — Still no response from First State so I decide to apply to another bank. I skip over my previously decided second choice of Bank of Asheville because of their confusing sign up page. Instead I apply at one of my “on hold” choices, Malvern Federal Savings Bank because their first tier rate maximum is a hefty $35,000. Their sign-up page is very clear with the 5.01% rate displayed and beneath it a large APPLY NOW in red. I click through a multimedia screen and I am transferred to a Checking Finder web page. It says I have to be a resident of Delaware, Maryland, New Jersey, New York, Pennsylvania, West Virginia, or Ohio. So scratch that.
Saturday 4 April: Day 6 — I go to my next “on hold” choice which is Heartland Community Bank. This is a little more promising as there is a “Follow your progress” side bar that has eight steps. I fill out the forms at each step. At “Step 6: Fund Account” the initial deposit is limited to $2,500. That is curious, I wonder why there is a limit? At the end the confirmation step page never appears, so I save my progress, which you can do at each step. When I re-enter the sign-up process using my saved code I get a message that reads:
Thank you for your submission of a deposit account application to HEARTLAND Community Bank. The approval of your account is pending until further review by the Bank. You will be contacted by a member of our staff with further details.
Hmm, sounds familiar: You will be contacted.
Monday 6 April: Day 8 — A week after first applying to First State I received an email that had the following link to their First Choice Checking sign-up at Checking Finder. I have already deposited money with Heartland Community Bank so I pass on First State.
Wednesday 8 April: Day 10 — I received an email from Heartland that said in part:
Congratulations, your account with Heartland Community Bank has been approved! Your account number will be assigned and your account activated upon receipt of your signed signature card. Your application confirmation number is ________. If you have not already printed your signature card, you will need this number.
Once I have the signature card completed I have to mail it to Heartland. Just one problem — the card will not print. I have the correct page in my browser but it comes up blank every time. Neither Firefox nor Internet Explorer running on Windows or Ubuntu can get the signature card page to display. I send an email to Heartland to inform them of the problem.
Thursday 9 April: Day 11 — I was able to print the signature card after the website righted itself.
Friday 10 April: Day 12 — Mailed the signature card to Heartland.
No response from Heartland.
Tuesday 21 April: Day 23 — It has been 11 days since I mailed my signature card so I sent an email asking what is the next step in accessing my account. email@example.com was not working but with firstname.lastname@example.org I was successful. However, after sending in the email I noticed the bank had dropped their rate to 4.02%. Time to apply elsewhere. I went back to First State and retrieved their email of the 6th April and followed the Checking Finder link. The sign-up was quick and smooth. My opening deposit with Heartland was $2,500 which now I need to retrieve. I have learned my lesson and open my account with First State for $500. On the last page of the sign-up was this message:
If you are not contacted by a representative from First State Bank within 2 business days, please contact Rita Brecheisen, First State Bank Vice President at 913 371 1242.
This is encouraging.
Wednesday 22 April: Day 24 — I received a confirmation email from First State thanking me for my application. It said that within two business days the bank will proceed with my account options. [Note: eligibility recently restricted, see updates at end of post]
Thursday 23 April: Day 25 — I received an email welcoming me to the bank. I now need to send:
- Work Telephone Number
- Cell Telephone Number
- City/State/Country of birth
- Beneficiary Relationship to me
- Beneficiary Address
- Beneficiary Social Security Number
- Beneficiary date of birth
- Copy of driver’s license
- Copy of Social Security card
- Desired ATM card PIN
I scanned the required documents and emailed all the above information. You can have your PIN randomly generated and mail the documents if you don’t want to use email.
Friday 24 April: Day 26 — An email from First State:
Thank you for all of the information. It will be Monday before I can finalize the account.
Now cast your mind back to 21 April and my application with Heartland. As the account was almost open I decided to let it continue. Today I received three emails from Heartland. The first simply said that my Internet Banking password has been temporarily changed by the Financial Institution. The second said that there will be a separate e-mail containing all of your account information, accessed through their Mail Safe system. The third email instructed me how to register with Perimeter Internetworking. Once registered I accessed my secure email which contained:
- Bank routing number
- Bank account number
- On-line banking user ID
- Temporary password
My debit card should arrive within 7 days, PIN to follow. Debit card limit is $1,000 per day, $500 at an ATM. I will withdraw my deposit but keep the account open for such a time as the interest rate is raised again.
Saturday 25 April: Day 27 — My Heartland debit card arrived.
Monday 27 April: Day 29 — My Heartland PIN arrived with a separate mailing of a welcome card from the bank. This completes the Heartland sign-up. Too bad. Because of the interest rate drop I won’t be banking with Heartland.
Tuesday 28 April: Day 30 — First State sent an email explaining they are processing my ACH and tomorrow will mail a package with all the particulars. They are ordering 50 complimentary checks and an ATM/debit card. The checks are especially handy for out of state accounts for purchases that can’t be made with a debit card. It is a while since I have been offered complimentary checks.
Thursday 30 April: Day 32 — A friend suggested I use PayPal to transfer my funds out of Heartland. PayPal deposited two small amounts in my Heartland account and I verified the amounts with PayPal. Today I withdrew my money from Heartland via PayPal. It takes 3 to 5 days to appear in PayPal. Then I transfer the money to my home bank which takes 1 to 2 days.
Friday 1 May: Day 33 — I received the package that was promised on Tuesday 28th which contained these papers to sign and return:
- Internet Banking and Bill Paying Agreement / Disclosure
- Online Banking Enrollment
- Contract for Deposit Account Payable on Death
- ATM Request Form
- Backup Withholding Form
- Agreement to the Several Disclosures
There was also a stamped addressed envelope to return the papers, a few temporary blank checks, and a First State mouse pad. Some additional nice touches were post-it notes to guide me through the papers, my own copies of the papers, and someone taking the trouble to highlight a $50 early closing fee. I was able to log into my account and see my balance. I setup my required ACH with my company online. I also setup the ability to deposit and withdraw funds electronically. This wasn’t done directly through the bank but with a third party service.
Monday 4 May: Day 36 — Three pieces of mail arrived from First State. A box of fifty complimentary checks; a receipt for my initial deposit; and a letter from the Senior Vice President, Reid Hillmer, thanking me for establishing a checking account with the bank. I sure do feel spoiled, receiving all this attention.
Thursday 7 May: Day 39 — A letter arrived from First State informing me that I had been approved for an ATM card. Also enclosed was a sheet of ATM facts and an electronic funds and disclosure agreement. The ATM has a withdrawal limit of $350 per day and a merchant purchase of $1,000 per day.
Friday 8 May: Day 40 — I emailed First State yesterday evening about the merchant purchase limit. I got a quick response back today:
If you need to make a special purchase and contact one of our customer service reps we can temporarily raise the limit for you. Usually we change it back the day after you call.
Monday 11 May: Day 43 — My First State ATM card arrived today. I have to go to an ATM to activate it. I already chose my PIN at Day 25. At the local bank ATM I did an inquiry to activate the card. This ends my sign-up process.
The confusion I had with First State on Day 1 was my fault, I just wasn’t paying attention. In the end I ended up with First State anyway, beginning my application at Day 23. My sign-up was completed on Day 43 so the total time was 21 days. In my experience that is about the average time. Some banks take two weeks and others four, unless you are lucky enough to have decent rewards checking offered locally.
While three weeks is a long time, the actual amount of time signing forms and mailing them back is around 15 minutes. If, like me, you have ever signed up for an Internet savings account and completed the sign-up process in just a few minutes, you may be wondering along with me why a rewards checking application takes so long. I believe it is because the rewards checking is offered mostly by local banks that are not yet geared for the Internet.
These banks are always very friendly and helpful. For an example, look at Day 40. If you have a decent sum to deposit the returns are well worth the effort. So don’t let the long process of sign-up put you off. The rewards are well worth it. And let me know of your experiences with rewards checking. In these times of low interest rates this is my favorite FDIC insured vehicle for safeguarding my emergency funds.
20 May 2009 Reid Hillmer, Senior Vice President of First State, informed me via a comment that the bank is no longer accepting applications from outside the greater Kansas City metropolitan area.
27 May 2009 I received an interesting email today. I will show you the gist of it and then comment. First State writes that the First Choice Checking account is designed to be a primary household checking account for conducting everyday transactions which is defined as:
- ACH – Automated Clearing House transactions:
- Utility bills (power, water, trash, telephone, gas, cable TV, Internet access)
- Religious or Charitable periodic donations
- Insurance payments (Auto, Home, Life, Health, other)
- Dues and subscriptions
- Payroll Direct Deposit
- Government payments (Social Security, Railroad Retirement, VA, Military, Child Support)
- Private pension or retirement payments
- MasterMoney Debit Cards Purchases:
- Weekly grocery expenses
- Car fill-ups
- Home Maintenance and repair purchases
- Entertainment purchases
- Restaurant, fast-food, and fine dining purchases
- Automotive maintenance and repair purchases
- Clothing and school supplies
- On-Line purchases
- All other kinds of routine retail purchases
For the benefit of yourself and all First Choice Checking account holders, including especially the continuation of the premium interest rate, we encourage you to make the fullest possible use of ACH and MasterMoney debit card services, including those listed above.
This does not look promising. I have had several rewards checking accounts and I have never received such a communication as this. If a bank feels it is paying out too much in interest it normally just drops the rate. A bank could specify a certain dollar amount in transactions and I have seen one bank do that. Some have required you to take out a loan in order to receive the highest interest rate on checking.
First State originally opened up these accounts nationally but have since returned to local only. Obviously those that signed up from out of state have their own local bank. I think it would be foolish to transact all your business from a remote location. What happens if you have a problem to resolve that may be difficult to fix over the phone? Some people run more than one rewards checking account because the interest reduces (normally) once $25,000 is deposited, hence they have to divide their charges.
This is how I see the situation. I signed up for the 5% (now reduced) interest rate understanding that the conditions were ten transactions, electronic statements, and one ACH deposit. If the 5% rate is discontinued I will move to another bank of which there are a number I have already identified. First State has just added a whole new set of hazy conditions to the normal rewards checking requirements. Therefore they have been added to my Gotchas section.