Since Coulee Bank dropped their rewards checking rate from 5% to 4% I have been looking for another bank. There are several banks that still offer 5% on their rewards checking accounts but there is one difficulty — they all take local customers only. This didn’t used to be but gradually many banks have withdrawn from the national market. Hence I decided on a bank that is still recruiting customers nationwide (except California). However, see Updates below.

Now First Arkansas Bank & Trust offers only 4.4% (since reduced) but with one redeeming quality — the rate applies up to $50,000. For this you only need to complete the usual ten point of sale debit card transactions per month. Also the one direct deposit, ACH debit, or online bill payment per month. You have to agree to receive E-statements and sign into your online banking account once a month.

Automate

I automate the direct deposit and receiving E-statements so no problem there. As for the ten debits I simply keep a thin card the size of a credit card in my wallet and write on one border 1, 2, 3, 4, etc. as I make charges. I don’t even have to take the card out of my wallet as the top border is visible. Many banks do not require a sign in each month and when they do it is an annoyance. It really seems to have no purpose other than to catch you out so that you do not qualify for your interest. However, an entry in Google calendar takes care of remembering.

Signing Up

It is easy enough to sign up. You just fill in a few details at the Kasasa website you are redirected to when you click on the big green OPEN NOW. You have to answer some questions about your credit that only you would know and submit a $100 deposit. I completed the process on a Tuesday evening and on Saturday a packet arrived with some forms. I opened the envelope on Monday and mailed the required information back on Tuesday. I was able to go online and setup my direct deposit from my pay because the bank routing number and my account number were on my temporary checks.

Inside The Packet

There was a cover letter, an application form, a debit card application, a Truth in Savings Disclosure, a fee schedule, and a form to order checks. I didn’t need checks and I signed the two forms where they were highlighted. I had to write in an emergency contact but otherwise I was almost done. A copy of my driver’s license was needed to comply with Federal law. The whole thing was painless and much smoother than previous applications from other banks. Yes I know, we should be able to do the whole thing over the Internet and be done, just like an online savings account.

Once the signed paperwork was received by the bank a Visa debit card was mailed to me and later a PIN. The card is activated by requesting a balance at an ATM or purchasing from a retailer using the PIN. I did a balance inquiry at a local ATM for which a $1 fee showed up several days later in my Arkansas Bank & Trust account. This was refunded when I met the transaction requirements for the month.

External Transfers

One of the most useful functions for a bank to offer to its out of state customers is a simple and fast external account transfer ability. With First Arkansas Bank & Trust an online form is available to fill in the details of your account you wish to link to. The form with a voided check has to be mailed or faxed to the bank. You also have to specify the maximum daily amount of a transfer. The bank says that if you transfer money to external accounts, a $5.00 fee will apply for each transfer.

A friend told me that he sets up his home bank with PayPal to do transfers. When he opens a new account with an out of state bank he adds the bank to PayPal. Then he transfers money to PayPal and from PayPal to the new bank. It takes up to seven days to complete. PayPal will often call for verification when you initiate a transfer. All this is accomplished online. One advantage is that if you have several banks they can be indirectly connected via PayPal without being connected to each other.

Updates

13 Aug 2009 — According to Bank Deals, “First Arkansas Bank & Trust stopped accepting nationwide applications for its reward checking account on Monday. Only applications from Arkansas residents are now accepted.” This illustrates the importance of signing up quickly for a good rewards checking account as soon as it goes national.
29 Oct 2009 — Some bad news:
Effective with your new statement cycle beginning 11/3/2009, the following changes will be made:

• On balances from $0.01 to $50,000 the new interest rate will be 3.45% APR / 3.50% APY
• On balances over $50,000, the new interest rate will be 0.50% APR / 0.50% APY

Effective with your new statement cycle beginning 12/2/2009, the following changes will be made:

• On balances from$0.01 to $35,000 the interest rate will be 3.45% APR / 3.50% APY
• On balances over $35,000 the interest rate will be 0.50% APR / 0.50% APY

Related posts:

1. Rewards Checking: Lee County Bank and Trust
2. Rewards Checking
3. Arkansas Bank Charges 82,563% Overdraft Interest

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:

1. AmericaNet Bank
2. Bank of Asheville
3. Coulee Bank
4. Evantage Bank
5. First State Bank of Kansas City (eligibility recently restricted)
6. Franklin Bank & Trust Company
7. Heartland Community Bank
8. Malvern Federal Savings Bank
9. Noblebank & Trust, NA
10. Union State Bank
11. 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.

Rewards checking at First State Bank

Applying On-line

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:

Week One

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.

Week Two

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.

Week Three

No response from Heartland.

Week Four

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. support@heartlandbankonline.com was not working but with websupport@heartlandbankonline.com 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.

Week Five

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.

Week Six

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.

Week Seven

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.

Conclusions

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.

Updates

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:
  • Debits-Payments
    • 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
  • Credits-Deposits
    • 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.

Related posts:

1. Rewards Checking: Lee County Bank and Trust
2. Rewards Checking: First Arkansas Bank & Trust
3. Rewards Checking

For the convenience of having a bank or credit union that offers rewards checking and is also close to home I joined Deseret First Credit Union. The nearest branch is only eleven miles away, their rewards checking is at 5%, and of course it is a credit union, which I prefer. To be eligible to join, one has to be a member of the Church of Jesus Christ of Latter-day Saints or be employed by the Church. To earn your 5% you have to do the usual monthly direct deposit or ACH, ten debit card transactions, and receive eStatements. You don’t have to access your account once a month as an additional requirement to earn your 5%.

In the credit union’s Tools and Education section is the familiar One For the Money by Elder Ashton. There is also a YouthCents section targeted at parents, leaders, and teachers of youth. In the Locations / Contact Us section is a list of over 2,000 basic transaction branches where you can use credit unions throughout the U.S. to make deposits, withdrawals, loan payments, etc. All you need is your account number and a government-issued photo identification. I haven’t heard about this service because my current credit union does not offer it.

As a bonus, the credit union does make humorous ads, though you might need to know a little about the LDS life-style to find them funny. The ad below is my favorite but also check out “The Weddings” and “Active“.

Updates

30 Mar 2009 Today I received this email:

…we would like to inform you that your Rewards Checking account rates will change as follows, beginning with the next monthly qualification cycle starting March 31, 2009:

$0 – $25,000.00 balance w/ minimum requirements    3.01% APY
$25,000.01  & higher balance w/ minimum requirements    0.70% APY
Balances w/o minimum requirements    0.20% APY

Unfortunately I will be drawing my account down to the minimum of $25. For 3% it is not worth the effort to get the required transactions. The account was no trouble to open and it will be even less trouble to pull out my money. There are a number of banks still at 5% and I will be looking at one of those.

Related posts:

1. Rewards Checking
2. Rewards Checking: Lee County Bank and Trust
3. Rewards Checking: First Arkansas Bank & Trust

26 Dec 2008 Recently the rewards checking rate dropped to 4% at Lee County Bank and Trust. See Bank Rewards Checking for banks still offering at least 5% on their rewards checking.

8 Jan 2009 Today I received notice that tomorrow the rate drops to 3%. Good grief that’s hardly rewards checking and I’m sure some customers will not appreciate the short notice. One wonders if the bank is in some sort of trouble. Fortunately I already pulled out my money and signed up with Deseret First Credit Union.

Rewards Checking at Lee County Bank and Trust

Rewards Checking

I wrote earlier about my experience with rewards checking at Coulee Bank. Lee County Bank and Trust offer the same 6.01% APY with their rewards checking account. They require 10 check card transactions a month, one automatic payment a month, online statements, and accessing your account at least once a month. They pay 6.01% on the first $25,000 and 2.50% on anything above that. The base rate for not meeting requirements is 0.15%. For those with a lot of spare cash, the 2.50% is a very good rate. However, I am merely looking for a backup account to transfer to if Coulee Bank should drop their rates or become rickety.

Process Me

The whole process of signing up for my Lee County Bank and Trust account took a month. Not exactly at the speed of internet time. It began with the initial signup June 26 through CheckingFinder where I electronically made my first deposit. This was very smooth and I received an email saying:

Your application for The Big Account was successful. You will be contacted shortly by a representative at Lee County Bank & Trust, N.A.

The next day I was indeed contacted with a pleasant email which began:

Let me be the first to welcome you to Lee County Bank & Trust, N.A. We are so happy to have you as a new Big Account Checking customer. Your account has been approved and I’d like to let you know what you can expect from here.

In the mail I was to receive these several documents to sign and be notarized:

• Online Statement Agreement
• Combined ATM/POS/Debit Card request form
• Account Holder Card
• TIN/Backup Withholding
• Online Banking Service Application
• Notary Acknowledgment (just fill out, not sign)

This was not particularly stressful, as I stopped by my Credit Union on the way home from work and they notarized the documents for no charge. This was accomplished by June 6.

The End is Near

I received an email July 15 asking for a login name. Apparently I had left this blank on one of the forms. I could call a toll-free number to request a login name or email my choice. I used email.

The next day I got an email that began:

You are now officially a Big Account Customer! We received your documents today and your debit card has been ordered. The following is a summary of how to access your online banking account.

July 18 I received in the mail cardholder instructions to select my PIN using a toll-free number. Fortunately they had handwritten the last 4 digits of my debit card in the instructions. Around July 23rd I received my debit card which finally completed the application process. The bank automatically pays full interest the first month whether or not you meet the requirements to account for the time it takes to get everything in order.

Transfers

I found that online at the bank there was no way to transfer money and also no internal messaging once I logged in. I sent an email to the bank asking about transfers and mentioned this was an important feature for me because I lived out of state. Recall that the initial deposit was made through CheckingFinder. The bank said that a transfer capability will be added the next week. Here are the instructions for external transfers:

To access transfers, login to online banking and press the “transfers” button located near the top left corner, then press “external transfers” from the sub-button menu.  There you will find a form to fill out that can be mailed (address is on the form) or faxed (not toll-free). Please note that you will need a copy of a voided check with the form. This is only for incoming transfers.

Conclusion

I didn’t mind the long process because I only have to do it once. I understand that a small bank opening up accounts nationwide is going to have some growing pains. At times I felt like a beta tester, for example, when I asked about external transfers. The response was almost “Oh yeah, we forgot about that, we will have that fixed by next week.” I am used to logging in and in a few clicks transferring money, incoming and outgoing. However, I think over time improvements will be made and they are a very friendly bank, energized and ready to grow. For a rewards checking account they have less monthly requirements than many banks and the 2.50% paid for over $25,000 balances is excellent. But most of all I just love that six percent.

Related posts:

1. Rewards Checking: First Arkansas Bank & Trust
2. Rewards Checking
3. Rewards Checking: First State Bank

After a few days I received my checking card, complete with a picture of a steamboat. A really nice feature was a user name I could choose rather than have to remember the account number. The web account features were reasonable. There was no count of qualifying transactions but my monthly transaction count ended on the last day of the month making it easy to remember. To transfer more money to my account I sent a message in the internal email of the account giving the routing number, account number, and amount. The first month you do not have to meet the requirements to obtain the 6.01%. Even so, I met the ACH requirement by having $50 a pay period (fortnightly) transfered from my pay. The 10 credit transactions are easy to meet because every workday I eat out for lunch. Some rewards checking accounts can require as many as 15 transactions and also mandate at least one account access a month. Coulee Bank rewards checking is still free and pays a standard 0.30% APY if you don’t meet the requirements during the month. A feature that I don’t use is the $20 to $25 a month reimbursal of ATM fees provided you met the transaction requirements. I don’t expect the 6.01% rate will last for long. Some other banks that started at 6.01% have dropped their rates to 5%. Just yesterday I received an email from Coulee Bank that said in part:

Rewards Checking has been an amazing success due to its incredible rate, ease-of-use, and environmentally friendly attributes. Due to rising costs to deliver this product however, it has been decided to limit the number of Rewards Checking accounts to one per Customer/Social Security Number.

Most of us are going to have difficulty funding one account so this will not affect us. The rate I am earning is 24 times the amount I receive from my credit union checking and even the standard 0.3% beats their 0.25%. I hope this little narrative has been of interest.

Updates

26 Dec 2008 Recently the rewards checking rate dropped to 5% at Coulee Bank.
28 Mar 2009 See Bank Rewards Checking for banks still offering 5% on their rewards checking.
2 Jul 2009 Coulee dropped their rate to 4%.

Related posts:

1. Rewards Checking: Lee County Bank and Trust
2. Rewards Checking: First Arkansas Bank & Trust
3. Rewards Checking at Deseret First Credit Union