4.01% Reward Checking at an Arizona CU (Credit Union West)
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Update 5/10/09: The top yield has fallen to 4.01% APY. Refer to the bottom of the post for the rate history.
Credit Union West is a reward checking account called Star Checking. It's very typical of a reward checking account. It has a yield of 4.01% APY for the first $25,000 (1.50% for above). Also, all ATM fees are automatically reimbursed. The high rate and free ATM usage requires 10 debit card purchases per month, Direct Deposit and eStatements. Without these conditions, the rate falls to 0.25% and you receive no ATM reimbursements. The account remains free of monthly fees regardless of meeting these conditions.
Credit Union West continues to offer very competitive IRA certificates. I had last reported on their rates in December. You still can get a 5.80% APY 5-year IRA CD with a $50K minimum deposit.
Field of membership includes anyone who lives, works, or worships in Maricopa County, Arizona. The credit union is located in Glendale. It is federally insured by the NCUA (Charter # 68421).
Inside Look at Reward Checking Accounts
Credit Union West mentioned that Star Checking Account was being powered by BancVue. I found BancVue's website and read over their Reward Checking pitch that's targeted to credit unions and community banks. I found the following quote interesting:
Seems like $455 is high when you consider they have to pay out the high interest rate and reimburse ATM fees. They do claim the average customer makes 20 debit card purchases per month. I wonder how much per transaction they get from these. If you only use your debit cards for small purchases, I can't see how they would profit much from these. Perhaps they hope you'll get into the habit of using it for all of your purchases.
Rate History:
05/04/09: 4.01% APY up to $25K, 1.50% APY over
03/05/08: 5.01% APY up to $25K, 2.00% APY over
05/23/07: 6.01% APY
Edit 7/04/09: Updated URL of reward checking page. Removed asset/member info.
Edit 1/09/09: Updated rate history and added APY for above cap
Credit Union West is a reward checking account called Star Checking. It's very typical of a reward checking account. It has a yield of 4.01% APY for the first $25,000 (1.50% for above). Also, all ATM fees are automatically reimbursed. The high rate and free ATM usage requires 10 debit card purchases per month, Direct Deposit and eStatements. Without these conditions, the rate falls to 0.25% and you receive no ATM reimbursements. The account remains free of monthly fees regardless of meeting these conditions.
Credit Union West continues to offer very competitive IRA certificates. I had last reported on their rates in December. You still can get a 5.80% APY 5-year IRA CD with a $50K minimum deposit.
Field of membership includes anyone who lives, works, or worships in Maricopa County, Arizona. The credit union is located in Glendale. It is federally insured by the NCUA (Charter # 68421).
Inside Look at Reward Checking Accounts
Credit Union West mentioned that Star Checking Account was being powered by BancVue. I found BancVue's website and read over their Reward Checking pitch that's targeted to credit unions and community banks. I found the following quote interesting:
As a result of this increased balance, increased transactional activity, and increased use of technology, each account will generate $455 or more in annual profit
Seems like $455 is high when you consider they have to pay out the high interest rate and reimburse ATM fees. They do claim the average customer makes 20 debit card purchases per month. I wonder how much per transaction they get from these. If you only use your debit cards for small purchases, I can't see how they would profit much from these. Perhaps they hope you'll get into the habit of using it for all of your purchases.
Rate History:
05/04/09: 4.01% APY up to $25K, 1.50% APY over
03/05/08: 5.01% APY up to $25K, 2.00% APY over
05/23/07: 6.01% APY
Edit 7/04/09: Updated URL of reward checking page. Removed asset/member info.
Edit 1/09/09: Updated rate history and added APY for above cap
Labels: Arizona, checking accounts, Credit Union West, credit unions, rewards checking accounts
posted by Banking Guy at
5/23/2007 06:29:00 AM
8 Comments: Post a Comment
comment policy end of commentsI attended a Bancvue presentation for this product and the math is screwy to come up with a $455 profit per account.
Not a bad product, but nowhere as profitable as they claim.
Here's more on the product:
http://www.strunklp.com/custom.asp?id=128274&page=27
By
Anonymous, at 7:24 AM, May 23, 2007
Banking Guy,
BankVue has a guarantee for 'reward checking' ===> We will deliver new customers that generate new profits. In fact, we guarantee that your Reward Checking relationships will be twice as profitable as your Free Checking relationships.
I wonder if BankVue makes-up the difference if they fail to deliver what they guarantee.
- SVG
By
SVG, at 10:55 AM, May 23, 2007
Also mentioned amongst the sales materials for this product is how NSF revenue will increase dramatically.
I've signed up for one of these and will ride it until it lasts, but I'm not counting on it lasting very long. My plan is to max out ATM reimbursements, peform 10 $1 debit transactions, and keep $25k in there at 6.01% (the max at my bank). I can't possibly see how this will be profitable for them, but I'm going to enjoy it while it lasts.
By
Anonymous, at 11:02 AM, May 23, 2007
Anon,
>>Also mentioned amongst the sales materials for this product is how NSF revenue will increase dramatically.<<
Hmm ... Interesting.
I'm sure BancVue will have some data/research to back-up this claim, however I suspect perhaps this claim contradicts with what they are claiming elsewhere !
Elsewhere they are claiming that depositors will put more money into 'rewards checking' than what they would in the 'free checking'. Assuming that this claim is true then it is logical that actually NSF (Non-Sufficient-Funds) situation will actually decrease, rather than increase.
Anyways if the NSF revenue were to increase 'dramatically' it is doubtful that those depositors from whom this 'dramatic' revenue is generated will stick around in this 'punishment checking' *smile* filling-up the coffers of the bank/CU.
- SVG
By
SVG, at 1:49 PM, May 23, 2007
NSF only increases due to the fact that the FI will gain more customers/members. BV doesn't claim to increase per ACCOUNT NSF; rather, FI-Wide NSF by growing the customer/member base. Additionally, the nearly-linear relationship between NSF and # of transactions is well proven (recently validated in article in American Banker). In a Reward Checking-style account the number of TOTAL POS transactions is 2-3xs higher than in a traditional checking account. The higher transactional volume increases the tendency for an account to overdraw, but the higher balance decreases that tendency. On average the two forces balance out and you get roughly the same NSF profile in Reward Checking that you get in Free Checking.
By
Anonymous, at 3:43 PM, November 05, 2007
5.01% now...
By
Brian, at 3:47 PM, March 05, 2008
Need to add: 2.00% APY for balances over $25K.
By
Anonymous, at 4:00 PM, December 28, 2008
4.01% now
By
Michael, at 7:24 PM, May 04, 2009
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