History of the High Yield Reward Checking Account read and submit comments for this post

What is the first bank to offer a high yield reward checking account? According to this Northern Colorado Business Report article, it was City National Bank in 1997. City National Bank is a small community bank located in Taylor, Texas. The bank worked with BancVue to develop a product with the goal of customer retention and to give it an edge over the larger banks.

BancVue used this experience to create the high yield reward checking product that could be rolled out to other banks. The stats showing the benefits to banks of these reward checking accounts apparently comes from City National Bank. Before rolling it out, BancVue worked with 10 other banks to perfect the software. It then rolled it out nationwide on October 2005.

In addition to the history, the article provides some insights into these reward checking accounts. It looks like BancVue helps the banks decide on things like yield, required number of debit card transactions and the maximum balance. The BancVue CEO was quoted as saying that the lowest rate that works with this model is around 4%, but they often encourage the banks to offer a higher rate. The CEO also mentioned that BancVue is working on three other products, and according to the CEO, "it's going to blow the doors off of reward checking."

It's interesting to note that City National Bank has maintained the 4.03% APY since I can remember. The 4.03% APY is earned on all balances without a cap. I wonder when BancVue decided to encourage banks to increase the rate to around 6%. Perhaps it was in 2006 when 5-percent-plus online savings accounts started to become common.

For more information and discussion on these reward checking accounts, please see my reward checking news and overview post. To find a reward checking account, please see my list of reward checking accounts around the nation and the best checking account post.