5.01% Interest On A Checking Account?

After feeling pretty good about the 4.60% APY I described getting at an online savings account at OneUnited (though that rate has dropped since earlier in the week!), I found an article in the April issue of Kiplinger’s reporting that Monroe Bank and Trust was recently paying 6% on a checking account. Looking at its website today, Monroe is currently paying 5.01% APY on its Ultra High Interest Performance Checking account. The account has no minimum balance, includes free starter checks and a debit card, and has no ATM fees.

There are at least two catches. First, the 5.01% APY is on your balance up to $25,000—and then drops to 1.01% APY. Second, you apparently have to make 15 debit-card purchases and have at least one direct deposit during each statement cycle. It was not quickly clear from the website how long a statement cycle is. And if you don’t fulfill those requirements, your interest is only 0.25% APY.

Those limitations and requirements actually seem like a pretty big pain in the rear to me. Fortunately, the Kiplinger’s article lists a few other deals on interest checking accounts at online banks; and they don’t all have quite those limitations and requirements. Here are some of the ones that stood out to me that appeared from their websites to be paying over 3.00% APY: City National Bank’s Reward Checking account (3.28% APY, requires 10 debit-card purchases and 1 direct deposit each month); EverBank’s FreeNet Checking (4.51% APY introductory rate; 3.01-4.51% APY after that, depending on your balance); ING Direct’s Electric Orange checking account (2.25-4.00% APY, depending on your balance—but doesn’t go over 3.00% until your balance hits $50,000); Salem Five Direct’s eOne checking account (3.50-4.00% APY, depending on your balance, but only on balances under $1 million); and Schwab Bank’s High Yield Investor checking account (3.01% APY).

For comparison, here’s a link to Bankrate.com’s list of “Checking Rates for Online Interest checking.”