High Yield Checking Account

[radio-ologist]

Hey guys,

 

I've followed WCI's advice for a while as a medical student and resident, and I finally signed up on the forum to share what I think is a great account. No interests to disclose other than being a happy customer.

 

Consumer's Credit Union, based in IL, currently has a rewards checking account that offers a maximal interest rate of 4.59% on up to $20k. I signed up for this account back in August, received my initial dividend auto-deposit on 9/30, and since then have earned $296.19 while building up my E fund. Free money, and I haven't had trouble meeting the requirements thus far. You have to use both their debit and credit cards and meet some transaction thresholds.

 

https://www.myconsumers.org/personal/checking/free-rewards-checking

 

Here's the details of the account:

• 3.09% APY up to $10,000 by 1.) complete 12 POS debit transactions, made without using your PIN, monthy; 2.) During each calendar month, complete 1 direct deposit OR 1 ACH debit OR 1 online bill pay; 3.) Access your online banking account 1x/month; 4.) enroll in eDocuments


• 3.59% APY up to $15,000 by 1.) Completing the above; 2.) spend $500 on a Consumers Credit Union Visa credit card


• 4.59% APY up to $20,000 by 1.) Completing the above; 2.) spend $1000 on a Consumers Credit Union Visa credit card


• No account fees, no minimum balance, all ATM fees reimbursed. If you don't meet requirements

 

I've consecutively earned 4.59% since September by making this my primary account and paying bills, buying groceries, shopping, buying gas, etc. on the CCU Visa card right up to the $1k mark. After that I switch to my AmEx Blue Cash Preferred card for more rewards.

 

The online system is pretty nice. I pay several bills, including the AmEx card, via their online bill pay, so that requirement is easy enough. You can fund the account with an initial transaction that's as large as you like; after that, they limit transactions into the account to $2500. They also participate in "shared branching" and forgive all ATM fees if you meet the minimum 3.09% requirement. Also, at my local credit union on the shared branching network, I can withdraw all funds from this account if I wish (allegedly). If you miss the minimum requirements, you don't get ATM fees refunded, and the APY drops to 0.01% for that month.

 

I've had zero issues with this account and think it's a pretty great spot to place you emergency fund. I've been using it as a regular checking account and keeping a high balance to protect my E funds. What do y'all think?

[DMFA]

Can't tell if ad in disguise...but whatev, I'll bite. It's worth talking about, anyway.

I've heard of them. There's a series of high-interest cash accounts which got posted on Doctor of Credit which include their requirements.

I could do 12 POS sales at work for lunch ($1-$4 each time), just toss in a $5 direct deposit each paycheck, and there's a free $51.50/month at least, assuming (0.0309/12)*20,000.  Log in around the 24th of each month to pump it back up to $20,000 just in case it dipped under.

Doing the full $20,000, that's a free $76.50/month (0.0459/12)*20,000).  Over the span of a year, that's $918 - you'd need over $91,380 in a 1% account like Ally to earn that much.  For that additional $25 gain, I'd need to use $1000/month from their CC...so your reward rate for that is 2.5%.  If you're using it for things outside increased rewards categories, e.g. Chase Sapphire Reserve, you'd get back 1.5% (assuming bookings done through Chase).  If you're paying routine bills - cable, utilities, phone, etc - chances are that's not going to be in an increased reward categories, unless perhaps it's rotating.

Now that CCU Visa Credit Card, I can't tell if that's the debit card that comes with the account or if it can be one of their cash-back or rewards cards.  If it can be one of the rewards cards, then that's basically double-dipping on their rewards - for their Visa Signature Rewards, getting 3% back from grocery stores turns into 5.5%, and 2% back from gas becomes 4.5%.

I'll give this a hard thought.  The ready-cash portion of my emergency fund is right around $20,000, anyway.

[radio-ologist]

Lol I thought about that as I was writing, but I assure you I have no affiliation with the bank. The CCU visa card is their Platinum Visa. 12 POS sales on the debit card, $1000 on the credit card. The rewards aren't anything to write home about. I just looked at the reward site--7700 points for a $50 Starbucks card.

You bring up a really good point though. I hadn't thought about their other credit cards. I don't know if using a different reward card would be possible with the account, but I think I'll find out.

Ninja edit: Just called CCU and asked about the credit card. The one used to fulfill the $500/1000 requirement can be any of their offerings. I have the Platinum card with a $5000 credit limit, and just had their representative switch that card, with the $5000 limit, to a Signature Cash Rebate Card. So thanks for that DMFA, you might've just made me a few bucks!

[Kamban]

All this work to get $918 for  $20K in a checking account. Maybe someone who is a resident and has time but not money would love it.

On the other had I have limited time time and have more than enough money. I will pass.

[radio-ologist]

Kamban wrote:

All this work to get $918 for  $20K in a checking account. Maybe someone who is a resident and has time but not money would love it.

On the other had I have limited time time and have more than enough money. I will pass.

Click to expand...

I fall into the former category. And I'm really using it as a primary checking account that also contains my E fund, so it's really no additional work other than remembering to swipe the debit card 12 times at the beginning of every month. Aside from that, it's just paying bills like anything else.

[Kamban]

radio-ologist wrote:

I fall into the former category. And I’m really using it as a primary checking account that also contains my E fund, so it’s really no additional work other than remembering to swipe the debit card 12 times at the beginning of every month. Aside from that, it’s just paying bills like anything else.

Click to expand...

Twenty five years ago I would have done the same thing as you as every penny saved early in life and invested counted for me. I would send off mail in rebates of $10 or even less, use coupons for stores and looked at every newspaper for the best deals.

Luckily that scrimping has paid off and now I look at time off as more important than any extra work. I don't use a debit card except to withdraw local currencies while traveling abroad. Almost all transactions are via 3 credit cards - Costco Citi, Capital one Visa ( has no foreign transaction fees) and now Chase Sapphire reserve. Hopefully you will also reach this stage one day.

[hightower]

That's a great rate of return for sure.  I just don't know that I want to deal with swiping one of their cards every month.  The downside is that you have to keep adding money to the account each month to keep your emergency fund at 20k (assuming you use the account to pay for the card purchases).  I'd rather have a set it and forget it place for my emergency funds.  But, thanks for pointing this out.  Maybe I'll consider it in the future.

[radio-ologist]

hightower wrote:

That’s a great rate of return for sure.  I just don’t know that I want to deal with swiping one of their cards every month.  The downside is that you have to keep adding money to the account each month to keep your emergency fund at 20k (assuming you use the account to pay for the card purchases).  I’d rather have a set it and forget it place for my emergency funds.  But, thanks for pointing this out.  Maybe I’ll consider it in the future.

Click to expand...

Yep, it's definitely not a set and forget solution. The requirements are definitely not hard to keep up with though.

[nachos31]

I have had a rewards checking account with CCU for several years just going doing the 12 non-pin debit transactions to get 3.09%. Too much time/effort to do the credit card maneuvering.

I initially opened it to be my first joint checking account with my at the time fiance, but then realized I kept not spending out of it so the balance could increase for the interest benefit. I then thought maybe it could be a part of my fixed income portfolio (guaranteed 3.09% ain't bad), which made sense when my portfolio was smaller but the changes described below make the account too fickle to depend upon and it will soon become an ever diminishing drop in the fixed income bucket/portion. Now I count it as part of my savings/emergency fund.

The big downside to the account is the same downside plaguing all these types of account. The interest rates, requirements, balance limits, and other details constantly change. They've changed several times in the past 3 or so years I've been with them. Initially their tiered rates were 3.09, 4.09, and 5.09 all for balances up to $25,000 with the same requirements. For the 3.09 tier, that has dropped to $10,000, which is disappointing. I except continued changes that make the account less attractive and at some point 12 debit transactions nuisance will overcome my perceived benefit and I may drop the account.

[VagabondMD]

Kamban wrote:

radio-ologist wrote:

I fall into the former category. And I’m really using it as a primary checking account that also contains my E fund, so it’s really no additional work other than remembering to swipe the debit card 12 times at the beginning of every month. Aside from that, it’s just paying bills like anything else. 

Click to expand…

Twenty five years ago I would have done the same thing as you as every penny saved early in life and invested counted for me. I would send off mail in rebates of $10 or even less, use coupons for stores and looked at every newspaper for the best deals.

Luckily that scrimping has paid off and now I look at time off as more important than any extra work. I don’t use a debit card except to withdraw local currencies while traveling abroad. Almost all transactions are via 3 credit cards – Costco Citi, Capital one Visa ( has no foreign transaction fees) and now Chase Sapphire reserve. Hopefully you will also reach this stage one day.

Click to expand...

I am in the same boat. Earning an extra few percent on $20k does not move the needle much, especially considering the mindclutter and extra work required recreating my financial life. As a resident, I religiously clipped coupons and such to save a few extra bucks each week. The requirement to make 12 POS debt card transactions per month might be a stopper for me right out of the gate. I would probably be up at night trying to remember if I hit the number (LOL).

No thanks!

[G]

Vagabond MD wrote:

Kamban wrote:

radio-ologist wrote:

I fall into the former category. And I’m really using it as a primary checking account that also contains my E fund, so it’s really no additional work other than remembering to swipe the debit card 12 times at the beginning of every month. Aside from that, it’s just paying bills like anything else. 

Click to expand…

Twenty five years ago I would have done the same thing as you as every penny saved early in life and invested counted for me. I would send off mail in rebates of $10 or even less, use coupons for stores and looked at every newspaper for the best deals.

Luckily that scrimping has paid off and now I look at time off as more important than any extra work. I don’t use a debit card except to withdraw local currencies while traveling abroad. Almost all transactions are via 3 credit cards – Costco Citi, Capital one Visa ( has no foreign transaction fees) and now Chase Sapphire reserve. Hopefully you will also reach this stage one day.

Click to expand…

I am in the same boat. Earning an extra few percent on $20k does not move the needle much, especially considering the mindclutter and extra work required recreating my financial life. As a resident, I religiously clipped coupons and such to save a few extra bucks each week. The requirement to make 12 POS debt card transactions per month might be a stopper for me right out of the gate. I would probably be up at night trying to remember if I hit the number (LOL).

No thanks!

Click to expand...

Vagabond, I still clip coupons and buy sale stuff...but I balk if it requires actual work (I agree:  12 debit card transactions?).

Kamban, you mentioned the Capital One Visa has no foreign transaction fees.  I use my Amex for similar reason, but when I pay attention, the exchange rate they use is less favorable compared to rates posted on Google finance.  Experience with that?

Radio-ologist, you are probably exactly who you say you are, but it looks exceedingly suspicious to join the forum the same day you post something that looks like an advertisement.  FWIW.

[Kamban]

G wrote:

Kamban, you mentioned the Capital One Visa has no foreign transaction fees. I use my Amex for similar reason, but when I pay attention, the exchange rate they use is less favorable compared to rates posted on Google finance. Experience with that?

Click to expand...

I only had the Costco Amex ( when thay used Amex) that charged foreign transaction fee.

When I got Capital One Visa it had 2 advantages - no annual fee and no foreign transaction fee. And I actually looked at the exchange rates when I traveled abroad and it was as good as what was posted on the net for that day. And certainly much better than what the merchants offered.

So in all my travels I always insisted that my purchase ( food, restaurants, tickets etc) be done in local currency - euros, aus dollars, koruna etc. And let Capital One visa convert it to US currency and post it on my account.

My biggest gripe - only a $9K monthly limit. Since We travel in groups with other friends and their families that amount is not sufficient and requires careful planning.

[Kamban]

Vagabond MD wrote:

Earning an extra few percent on $20k does not move the needle much, especially considering the mindclutter and extra work required recreating my financial life. As a resident, I religiously clipped coupons and such to save a few extra bucks each week. The requirement to make 12 POS debt card transactions per month might be a stopper for me right out of the gate. I would probably be up at night trying to remember if I hit the number (LOL).

Click to expand...

I don't clip coupons except the occasional ACE hardware loss leader coupons but use the bonus cards of certain stores and still check out the clearance section first before going to the sale section. 

At $20K deposit the amount gained is not worth the requirements. It would have been worthwhile if the 4.5 % rate applied up to $100-200K. Then I might bite. At $500K and above I get better returns with more risky investments, though they are calculated risky ones.

[radio-ologist]

G wrote:

Radio-ologist, you are probably exactly who you say you are, but it looks exceedingly suspicious to join the forum the same day you post something that looks like an advertisement.  FWIW.

Click to expand...

I definitely get that, but I'm mostly a lurker and a reader, and this is probably the only bit of financial advice I have to share at this point. Again, not an ad.

 

Can't wait for the day when I can shrug my shoulders at a free thousand bucks a year.