Reward Checking accounts are checking accounts offered by banks or credit unions that offer high interest rates in return for meeting certain requirements during a statement cycle. Typically, these requirements consist of:

* 10 (although 12 or more is now very common) debit card transactions
* 1 ACH transaction (sometimes you see a phrase like "direct deposit or auto ACH debit")
* Receiving e-statements instead of paper statements
* Signing on to the bank's or CU's on-line banking system

Often these type of accounts are capped, usually at 25K, meaning that account balances over the cap don't earn the high interest rate. An uncapped product is extemely rare. Some products have higher caps than 25K. Most Reward Checking accounts require a visit to a local branch to open, but there are some nationally available.

In Reward Checking accounts, one must distinguish between the terms "statement cycle" (or "statement period") and "qualification period." Keep in mind that it's when the transaction actually posts to your Reward Checking account and the definition of "qualification period" that determines what statement cycle that transaction belongs to. Here's an example of how it works with the Reward Checking account from First Arkansas Bank & Trust (FABaT):

"* Statement cycle begins with the first working day of a given month. For example, the January 2008 statement cycle is January 2nd through January 31st.
* Qualification period is through the last working day of a given month; debit card transactions must post to the account no later than this date in order to count for the corresponding statement cycle. For example, the qualification period for the December 2007 statement cycle is December 1st through December 31st; thus the qualification period for the January 2008 statement cycle is January 1st through January 31st."

Changes (not so good)
Unfortunately, with the lowered savings interest rate environment we are in, things are changing -- quickly. Although most Reward Checking accounts started at 6.01% APY or slightly higher, we've seen several reductions in interest rates, and less favorable terms. Some examples:

State Bank of Toledo (SBoT): Was at 6.01% APY, uncapped(!), available to all; now at 5.01% APY capped at 70K. And a few months later, it's now at 4.01% APY.

M/A-COM Federal Credit Union (MFCU): MFCU's 6% APY hasn't changed so far, but the product quickly moved from a nationally available account to an account that you had to make a branch visit to open, and it recently reduced it's 100K cap to 25K. Edit: And now the cap is down to 10K.

Provident Credit Union: Was at 6.01% with 25K cap, available to all. Rate was reduced to 5.51% APY in January, 5.01% APY on March 1st, 4.01% April 2nd.

Also, many new Reward Checking account products are coming out with lower caps, e.g. 20K or even 10K.

Meeting the requirements of Reward Checking accounts
1. The most common objection to these types of accounts is meeting the number of debit card transactions requirement, typically 10 transactions. Most people think that this is just too time-consuming and/or difficult. IMO, this is a misconception. Some strategies are:

* Just get into the habit of using your debit card instead of paying cash, especially for small purchases. Note that for liability purposes, it's best to make signature-based transactions, i.e. never enter the PIN number, and specify "credit" rather than "debit" or "ATM" when given a choice. Note that more and more vendors are not even requiring actual signatures, if the signature-based transaction is under a certain dollar amount.

It's possible that the below strategies might not work for a Reward Checking account that specifies Point of Sale (POS) transactions as the required form of debit card transaction. A Point of Sale transaction is one where you take your debit card to a physical location and use it there. Online transactions and perhaps direct bill pay at a payee's web site wouldn't qualify. If Point of Sale transactions are specified, then one should find out if that's literally true. Note: In the vast majority of cases, POS actually means a signature-based, i.e. credit card type of transaction.

* When paying bills, such as your phone bill, cable bill, etc., go to the payee's web site and make the payment there. Specify "credit card" as your payment method (absolutely do not specify "debit card" or using "a debit card network" because that could result in a non-qualifying ATM withdrawal type of transacion) and go from there. Some payee web sites will allow you to make partial payments to a given bill, meaning you can generate multiple transactions towards your transaction requirement by making multiple payments to one bill.

* Make on-line donations to a worthy cause using your debit card. Many charities offer the ability to set up recurring monthly donations. Note that there's been a lot of debate and discussion of *very* small recurring donation amounts $1.00, and how much that really benefits the charitable organization. Again, specify that you are using a credit card.

Some other notes about the number of debit card transactions requirement:
* ATM transactions don't generally count towards meeting this requirement.
* It's now fairly common that Reward Checking accounts require signature-based transactions to meet their transaction requirement. Since "signature-based transaction" means using your debit card as a credit card type of transaction, that gives yet another reason to do so, besides liability concerns, and possibly having the transaction become classified as an ATM withdrawal.

Parenthetically, there's much debate whether many very small transaction amounts give banks and CU's much less incentive to keep their reward checking account products -- after all, the smaller the transaction is, the less money they make from the transaction. I hope that issue will be discussed in this thread.

2. Another requirement of Reward Checking accounts is one ACH transaction per statement cycle. One common way of phrasing this is: "One Direct Deposit or ACH Auto Debit", which probably comes from the marketing literature of a company that sells the Reward Checking product to banks and credit unions. (Yes, apparently "Rewards Checking" is a product that is being marketed to financial institutions as a means of gaining customers and presumably becoming more profitable.)

Direct deposits (DD) are generally Automated Clearing House (ACH) transactions that credit your bank account. The most common form of a DD is your paycheck, where you receive just the pay stub only, and the money is deposited into your bank account for you. If you see the silly term "Auto ACH Debit" -- Auto Automated Clearing House Debit -- or more accurately "ACH debit", then you've other options:

* Some banks or credit unions, such as Provident CU, will allow you to set up recurring ACH transactions between their institution and another bank or CU, where you can specify the date, frequency, and type (debit or credit) of the ACH transaction. Although Provident CU doesn't offer on-line ACH transactions, you can submit a form instead. Other banks or CUs might offer on-line recurring ACH capabilities. Make sure you're not paying a fee for this service. If you've accounts at multiple banks, this is a very desirable option.

* If one of your banks allows you to make one-time ACH transactions, you can do this for yourself, but you have to remember to do this so that the transaction will post to your Reward Checking account during the qualification period. Some banks might allow you to set up recurring ACH transactions.

* Another method of generating an ACH transaction is to pay your bill at a payee web site that allows you to use your checking account for payment. This option is different from specifying your debit card. Sometimes it's called an e-check. The option should require you to specify the routing number of your Reward Checking institution and your Reward Checking account number.

Links - FatWallet Finance (FWF) Threads

Automatic $1.00 Monthly Donations To Qualify For Reward Offers
Although this thread focuses on the controversial $1.00/month amount, obviously, there's no need to contribute only $1.00/month. If you've a budget for donating money to charities, here's a method you can use to do that and to help meet your Reward Checking account requirements.

Reward Checking Accounts (High Yield and Available to All)
Look on this thread for links to specific reward checking products that are available to all.

Links - Other Lists of Reward Checking Accounts

Bank Deals rewards checking accounts - current entries

Bank Deals reward checking accounts - older entries

Other interesting Reward Checking account links:

BancVue Web Site
BancVue markets and sells Reward Checking account products to banks and credit unions. The link is essentially a presentation of what BancVue has to offer to potential clients. It looks like they're marketing a turn-key solution, including consultation and software.

Strunk & Associates, LP - Information about Reward Checking
It looks like BancVue has partnered with Strunk & Associates. See the below link.

Strunk & Associates - Reward Checking brochure
On the last page, you'll see BancVue.

Thanks to mariojm for the above two links given in his post in the State Bank of Toledo thread.

Bank Deals Post - Is This How Banks Will Make Money from the Reward Checking Accounts?

Bankrate.com Article - Reward checking pays high yields
Also linked in first Bank Deals post above.

Bank Deals Post - History of the High Yield Reward Checking Account

Banking Guy has done an amazing job setting up a Reward Checking account web site, with an introduction to Reward Checking Accounts and lists of nationally available Reward Checking accounts and Reward Checking accounts by state. The lists show the bank/credit union name, the APY, the balance cap, and the latest Bank Deals review date with a link to the review. Here are the useful links:

Reward Checking Introduction

Reward Checking Accounts Available Nationwide

Reward Checking Accounts by State

About the Quick Summary...
This is for anyone to maintain. I only request that discussions and opinions belong in specific posts in this thread, not in the Quick Summary.