Rewards Checking: First State Bank

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:

  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

Rewards checking at First State Bank

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.

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. was not working but with 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.


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:
    • 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.
Rickety signature.


  1. Alex Stewart says

    Thank you for your work.
    This information was really helpfull for me.

  2. I opened an account last night, after reviewing webinfo on
    I received an email today that I will “hear from them within two days”. I will give you progress report when news arrives.

  3. Sande,
    I look forward to hearing your news.

  4. Reid Hillmer says

    First State Bank of Kansas City Kansas is no longer accepting applications from outside the greater Kansas City metropolitan area. Anyone who lives or works in the KC metro area is still welcome to apply.

  5. Reid,
    Thank you for the update, it is appreciated.

  6. Rickety,
    My odyssey was similar to yours. In February, I was sitting with a $50,000 CD earning 4% that comes due in June and another $35,000 in a money market account who interest rate had dropped below 2%. So I decided it was time to figure out how to maximize my money. Then I learned about Rewards Checking.

    I used three research tools: Bank Deals’ list of Rewards Checking Accounts available nationwide, Bauer Financial and’s Safe and Sound Bank ratings. I limited my choices to four star banks.

    Like yourself, I started with Coulee to see if this was something for me. The application was simple, the people were very cooperative, and the concept worked for me.

    Three weeks after opening my Coulee account, I applied to and was accepted at Malvern. Their $35,000 limit was a big selling point. Again, the process went smoothly. It turned out I was lucky because I was accepted one week before Malvern stopped offering nationally.

    Previously, I had been doing my card purchasing mostly with 3% reward credit cards. So I did an analysis and determined that I could easily make 30 debit card purchases a month by no longer using either cash or credit cards. So I applied and was accepted at First State Bank. Again, I got in just a couple of weeks before they restricted accounts to the Kansas City area. They wanted a little more info than Coulee and Malvern, but were very cooperative.

    So when my CD matures in three weeks and I distribute those funds between my three Rewards Checking accounts, as long as each stays at 5%, I expect to earn over $4,000 a year in interest on total deposits of around $85,000.

  7. Bill,
    Coulee has worked great for me. I find at 5% if you have $24,000 in the account the earnings are $100 a month. I’m not sure how long First State will keep their rate at 5% after the email I received on 27th May. I am thinking of starting up the process of opening another account so that it is ready. If anyone has a rewards checking account they like, let me know.

    Another feature of these accounts is that most of them can be reduced to zero without a penalty. So if they raise their rates up again, money can be transferred back into the account.

    A point that First State is missing is that as soon as one reaches $25,000 then you will be making larger transactions anyway because the account will be filling up with interest and deposits but not earning the high rate. Hence a depositor is more likely to spend from that account, thus earning the bank more money on the transactions.

  8. I was looking at the banks on your Highly Rated Banks Offering Rewards Checking page. Of those 5% accounts you list as open to any US residents, both the Bank of Asheville and Franklin Bank and Trust apparently require a branch visit to open an account according to Union State Bank and Valley Bank only get three stars under Bankrate’s Safe and Sound system:

    I don’t see any other banks where you can get 5% from a quality bank if First State (or Coulee) drop their rates.

  9. Rickety, I don’t think First State’s list of Debit Card Purchases is such a big deal. Besides what is listed, I can’t think of much that doesn’t fall under the category of “All other kinds of routine retail purchases” and “On-line purchases”, except maybe a big ticket item like a computer or a refrigerator. In those cases just use Coulee.

  10. Bill,
    I will change the eligibility for Bank of Asheville and Franklin Bank & Trust in my table. Thanks for the update. For simplicity I just used one rating system, I didn’t want the table to get too crowded. As for eligible banks I can go down the ratings and look at 3 stars with Bauer Financial. It doesn’t seem to matter what rating the bank is if it is FDIC insured. I probably would not go lower than a 3 star though. I listed 4 and 5 star banks because I was thinking that they would give better service and be making more profit.

  11. Bill,
    First state isn’t saying not to charge certain items. I think what they are getting at is that they want to see activity much like a primary checking account. In other words, a number of larger dollar amount transactions. I use my rewards checking for fast food, renting movies, and Internet purchases — all small purchases. First State makes more money if we charge larger amounts.

    Typically I have 12 small transactions a month and the rest goes on my Credit Union cash back credit card. First State is the first bank that has ever expressed a problem with the transactions. Once the balance reaches $25,000 I will increase the dollar amount of the transactions anyway.

  12. Janette Hernandez says

    As a resident of Kansas City KS I found a bank who I thought could help me. Unfortunately I found myself changing banks two days before Christmas. In August 2009, my son who is 10 had a major surgery in his mouth it was horrible surgery that need to take place t. Lord knows he was in pain and with the economic crises well everything was overwhelming. I paid several doctors with my First State Bank card, to my understanding current charges were coming out of the checking account. In first week or so of September 2009 I contact Michelle at the Kansas branch off of Kansas Ave ( she is a wonderful person and was helping me with my account unfortunately I was not to bright on how to handle my account. So Frequently I called her to explain the charges on my account because the charges didn’t come in time occurring to the First State Banks online banking. With that said Michelle was and had help a lot.) and I asked her if she had a minute to go through my account with me. Of course she did and I asked her if that there a charge to my account for 69.99 for a company call Teeth Whiting. There for she advised me to contact the 1888-244-1412 and ask them on how to remove the charges. We both went over my account and it look like there was another charge from another company, a charge for 3.98 and another charge from Teeth Whiting for 5.98 or so. I explain to her that I didn’t request this orders she then asked me to contact the companies. When I did call them I was told my a rep that I need to file out the affidavit which is a form that I would allow for this company, who just stole from me, access to my checking account plus my social security. When in reality they had already obtain this information from somewhere if my account was charge. There for I was told my Michelle per Linette at Book Keeping that I need to write a letter and send the letter to my bank disputing the charges made to my account. I did I went in person to the bank and Michelle help me out had me sign the letter that was going to be dispute. The end of September 2009 I rec’d the charges credit back to my account plus there was new charge of 49.99 from the Teeth Whitting company, I called Michelle once again and told her about the charge and not to long from that I rec’d a small white envelope. I was told by Michelle to return the envelope, I try to at home I flag the envelope several days unfortunately I didn’t rec’d mail for several day and unfortunately the small Package was still there. With the cold season I was overwhelm with the flu and so was my children as soon as I was able to get up from bed I went to the local post office branch got a receipt and I made a copy and send it back to my First State Bank attention Michelle. The I rec’d and email from Michelle Janette,
    Hi, I checked with Linette the letter looks good but date it and sign your name to it. Also include that you never received the first package or never saw it.
    Call me if you have any questions.
    I did as I was told and we stop the credit card banking card. But the wrong thing about it is that Linete from Book Keeping never talk to me about the procedure that would occur. Nor I never receive any paper work about the dispute nor anything to let me know that everything was taking care of. December 21,2009 I notice a charge for 69.99 from the Teeth whiting. I called the bank and I was told my Linette who at the end of our conversation was very unprofessional that I lost the dispute and there was nothing she could do from here.( I also contacted Michelle and was told by here to deposit money in to my account because it was showing insufficient funds and I did from my saving I deposit 40.00 on Dec. 21,2009) I contact her supervisor Reed Hillmer and was told by him that he would have to contact that he was going to check on this for me. Im not satisfy with Mr. Hillmer and they way he operates his branch. I was told that I had to send of a certify letter to the Teeth Whiting and I never did I try to explained that Linette never advised me on such procedure and Mr. Hillmer told me that it was comment since all charges will be charge back to me plus I will not be able to have the product that Teeth Whiting Charge me for. Im extremely sad and overwhelm with Mr. Hillmer responds to me. By the way I never received the dispute documents that Linette ever send to the Teeth Whiting department. When I asked Mr. Hillmer for his bosses address so that I can write a complaint letter I was told he runs First State Bank and that he as well is the board commissioner of First State Bank. NO Solution from First State Bank. In conclusion I will never recommend this First State Bank to anyone in Kansas City KS.

    • Janette,

      That is an unfortunate story. The time when you really need a bank is when there is a dispute over money. I bank elsewhere myself now. It is interesting how different banks can be. The long process to sign up with First State would be enough to put anyone off. Also, sending out a letter telling people how they should bank is silly. The negative PR is just not worth it. Other banks I do business with don’t behave this way.

      I hope you found a bank that operates to your satisfaction.

  13. Gavin Glave says

    I appreciate what you have done listed here. I’m keen the area wherever you say you are doing this to supply back even though I might anticipate by all the feedback this is functioning for you at the same time.

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