Do High Yield Checking Accounts Still Exist?

In a word yes, high yield checking accounts do still exist, but today the term high yield checking is more of a subjective term. The economic crisis has driven down interest rates on mortgage loans, which in turn has driven down the return rates on interest bearing CD’s, checking and savings accounts. It is highly likely that high yield checking and savings accounts will remain at the current lows until the recession is over or at least the economy has taken a measurable turn for the better.

What are high yield checking accounts?

In 2003 the concept of a maximum balance checking account was a direct opposite of the banking products, banks big or small, had traditionally offered to its banking consumers. (Banks traditionally only offered low interest minimum balance checking accounts) So, when a small community bank called Pioneer Bank, in New Mexico first introduced maximum balance checking accounts the concept was a bold move away from traditional banking history. The idea being a maximum balance account would pay a higher or premium interest rate on an account up to a particular amount or cap and then pay a lower rate on the balance of the account that surpassed the cap. Eureka! The new concept had the attention of banking consumers and fell into step with the community bank and credit union philosophy of relationship banking.

Of course today high interest NOW accounts permeate the banking industry, but prior to the maximum balance accounts that originally began being offered in 2003 by Pioneer Bank this marketing concept was unheard of. The maximum balance accounts were borne and primarily were purposed as loss-leaders for community banks based on the concept of relationship banking, which by the way most community banks and credit unions were and still are branded to.

In 2004 and 2005 the concept was quickly adopted by numerous credit unions and community banks in West Texas and the high yield checking accounts trend was initiated. It was a third party vendor called BancVue which first came out with the concept of combining high yield checking accounts with maximum balance accounts and began rewarding their customers with a higher yield if they practiced specific cost saving banking behaviors and termed these accounts as a “reward” checking account.

The trend caught on quickly and by 2010 more than 1.5 million “reward” accounts were in place with BancVue alone, not to say that the national banks and others didn’t come out with their own brand of “reward” checking or high yield checking accounts.

Additionally, the new banking regulations that have come into full effect as of Oct 1, 2011, have fee weary banking consumers seeking alternative sources to do their banking and community banks and credit unions are already seeing a significant uptick in their balance sheets, and the numbers are expected to grow as traditional banks initiate new fees and increased minimum balances to try and recoup the $7 to $19 billion dollar annual losses the Dodd-Frank Act and Durbin Amendment have driven to the large nationwide banks. Check with your local community banks or credit unions and comparative shop for the best high yield checking account as rates do vary.