Found a 3% APR Max Checking Account for Emergency Fund

[RNwastash]

Hi Guys!! I opened a Max Checking account with 3% interest.  (to a max of $15,000 in the account). Yes there are stipulations, but I am in for the experiment.  You have to have 1 direct deposit /month, 10 ETB charges a month, 4 log-ins to their website.  I was able to open it with $ from a credit card (points earned from the CC!!).  It is through  Lake Michigan Credit Union (LMCU.org).  I'm sick of the low interest rates from the Money Market account from Capital One. 

[sherr]

A local bank near me (Capital Bank) had a very similar deal for a while. I think their interest rate was originally 4%. My experience with them was that they are a great bank, but that interest rate didn't last very long (less than a year iirc). I think it's not uncommon for banks / credit unions to have short-term deals like this to attract new customers and then reduce the benefits later. Just don't expect it to last forever.

[FIREman2036]

For anyone in Britain or able to invest there (i use my parents address but don't live there anymore) the santander 123 is great for sitting on emergency funds or waiting for a real estate opportunity like me. The rate is 3% up to GBP20,000 and you can have 2 accounts (that's around USD 65,000). You need to set up direct debits but these can be canceled once you have qualified. The rate has been stable for a few years now.

There are also rewards for paying utilities and petrol if you are actually going to use it for your main account.

[soccerluvof4]

Hi Guys!! I opened a Max Checking account with 3% interest.  (to a max of $15,000 in the account). Yes there are stipulations, but I am in for the experiment.  You have to have 1 direct deposit /month, 10 ETB charges a month, 4 log-ins to their website.  I was able to open it with $ from a credit card (points earned from the CC!!).  It is through  Lake Michigan Credit Union (LMCU.org).  I'm sick of the low interest rates from the Money Market account from Capital One.

I have seen this posted before and the same rate. Was actually looking for this so thanks! But its been a few months already. I am going to look into it. Covers inflation.

[KMB]

Does anyone who uses LMCU know how well it works with Personal Capital or Mint?

[Ohio Teacher]

Hi Guys!! I opened a Max Checking account with 3% interest.  (to a max of $15,000 in the account). Yes there are stipulations, but I am in for the experiment.  You have to have 1 direct deposit /month, 10 ETB charges a month, 4 log-ins to their website.  I was able to open it with $ from a credit card (points earned from the CC!!).  It is through  Lake Michigan Credit Union (LMCU.org).  I'm sick of the low interest rates from the Money Market account from Capital One.

I have been through two iterations of this with different CUs in Ohio.  They both had the same requirements that you mentioned: direct deposit, 10 debit transactions, and eStatements.  This is a common scheme, usually referred to as Reward Checking, and is usually promoted behind the scenes by a company named BankVue.  BankVue tries to convince the small credit unions and banks that they can give away large amounts of interest on the front end and it will reap huge benefits on the back end, such as mortgages, investment products, car loans, etc. 

The thing is, the only one that wins is BankVue.  Both credit unions realized this rather quickly and started aggressively lowering the rate.  One started at 4.5% and made it down to 1.5% before I bailed.  I then opened an account with the other CU at 3.5% and it was down to 1% when I left them.  They are both well under 1% now.

From experience, don't get your hopes up that this will last too long.

[RyeWhiskey]

The offers tend to surface and the dissipate when enough influx of capital happens. That is, unless it's a Kasasa account. Those tend to stay around longer and maintain the higher rates on rewards checking accounts. I currently use a rewards checking account at 3% for my EF and daily spending fund.

[smartierthanthou]

I've been banking with LMCU for three years now as they are local to me (West Michigan) and I have no complaints. In that time period, the interest rate has dropped from 4% to 3%, but I have no complaints with the service or the 3% interest on my checking/emergency fund. They've been a great credit union!

[milesdividendmd]

That sounds awesome. Will check it out.

[KMB]

I've been banking with LMCU for three years now as they are local to me (West Michigan) and I have no complaints. In that time period, the interest rate has dropped from 4% to 3%, but I have no complaints with the service or the 3% interest on my checking/emergency fund. They've been a great credit union!

I've been with United Bank of Michigan. They've got a similar program; 4% up to 10k. I've had it for 5 years now and they haven't reduced interest yet. But I can't get it to sink with personal capital :(

[TomTX]

These deals just seem like too much effort to me.

Okay, so - instead of a "regular" 1% savings account*, you get this 3% account. An extra $300/year in interest (pretax) - lets say $255 post-tax, if you are in the 15% bracket. In exchange, you have to:

Perform 10 debit card transactions a month. That's 120 transactions. Lets say, average of $10 per transaction. $1,200 - for which, you should be averaging 2% return on credit cards** = $24 foregone

So, your $255 is now $231

4 logins per month = 48 logins

..and woe to you if you forget to do all your logins or transactions. No 3% for you!

So, 168 individual actions (not counting account setup, account closing, additional 1099, time on "okay, am I at 9 transactions or 11 this month?" et cetera) - for $231

$1.38 per action. I'm sure I can come up with something better to do with my time. Churning rewards cards comes to mind, or spending a few hours on a side gig. Or Craigslisting junk from my house.


*Math simplicity. Maybe it's 0.85% Doesn't really matter.

** Quicksilver is 1.5% back on everything, and there are plenty of rotating category or category bonus cards which yield 2-5% on specific transactions. For example, I get back 3-5% on gasoline, I make my big Home Depot purchases in the 2nd quarter with 5% back, et cetera.

[gbmp]

These deals just seem like too much effort to me.

Okay, so - instead of a "regular" 1% savings account*, you get this 3% account. An extra $300/year in interest (pretax) - lets say $255 post-tax, if you are in the 15% bracket. In exchange, you have to:

Perform 10 debit card transactions a month. That's 120 transactions. Lets say, average of $10 per transaction. $1,200 - for which, you should be averaging 2% return on credit cards** = $24 foregone

So, your $255 is now $231

4 logins per month = 48 logins

..and woe to you if you forget to do all your logins or transactions. No 3% for you!

So, 168 individual actions (not counting account setup, account closing, additional 1099, time on "okay, am I at 9 transactions or 11 this month?" et cetera) - for $231

$1.38 per action. I'm sure I can come up with something better to do with my time. Churning rewards cards comes to mind, or spending a few hours on a side gig. Or Craigslisting junk from my house.


*Math simplicity. Maybe it's 0.85% Doesn't really matter.

** Quicksilver is 1.5% back on everything, and there are plenty of rotating category or category bonus cards which yield 2-5% on specific transactions. For example, I get back 3-5% on gasoline, I make my big Home Depot purchases in the 2nd quarter with 5% back, et cetera.

I agree the hassle factor should be considered, but they can make some sense -

We do rewards checking at RBank (rbanktexas.com) which gives 3.25% rate up to $15k and 1.0% on any additional amount past the first $15k.  Requirements aren't very onerous:
1 direct deposit per month
Opt in to receive monthly e-statements (no viewing or login requirements)
12 debit card transactions per month
You do have to go in in-person to initially set up the account which worked for us since we're local.

We made the rule that if a purchase costs less than $10, we use debit, looking at our transactions for the last few years we never failed to have at least 20 or so such transactions per month so all their requirements are set-and-forget for us, no specific individual actions we have to think about.

So, on 15k we expect:
487.50 gross, assuming effective tax rate is 15% which is pretty close for us, and average transaction cost of $5 for figuring forgone CC rewards at 2.0% which is very close for us as well, it works out to basically 400 dollars each year, or a 2.6% yield after tax and CC reward opportunity cost, not amazing, but we were going to have an e-fund anyway and a liquid, FDIC insured account yielding an honest after-tax 2.6% is pretty great compared to the alternatives I've seen in the current environment.

They also reimburse third-party ATM fees and have not-terrible technology, deposit checks via phone app, etc so convenience lost compared to a national chain bank isn't really a factor for us either.

[kpd905]

Perform 10 debit card transactions a month. That's 120 transactions. Lets say, average of $10 per transaction. $1,200 - for which, you should be averaging 2% return on credit cards** = $24 foregone

You could buy ten $0.15 Amazon gift cards a month.

[TomTX]

Perform 10 debit card transactions a month. That's 120 transactions. Lets say, average of $10 per transaction. $1,200 - for which, you should be averaging 2% return on credit cards** = $24 foregone

You could buy ten $0.15 Amazon gift cards a month.

...and then cash in ten $0.15 Amazon gift cards a month. Bleayh.

[kpd905]

Perform 10 debit card transactions a month. That's 120 transactions. Lets say, average of $10 per transaction. $1,200 - for which, you should be averaging 2% return on credit cards** = $24 foregone

You could buy ten $0.15 Amazon gift cards a month.

...and then cash in ten $0.15 Amazon gift cards a month. Bleayh.

You can just copy and paste the code in your account and it just adds each one to your balance.  Would probably take 5-10 minutes a month for $450/year of interest.

[Cyrano]

I run my expenses under $20 through rewards debit, those over $20 through rewards credit, and it works out for me without further thought.

[TomTX]

Perform 10 debit card transactions a month. That's 120 transactions. Lets say, average of $10 per transaction. $1,200 - for which, you should be averaging 2% return on credit cards** = $24 foregone

You could buy ten $0.15 Amazon gift cards a month.

...and then cash in ten $0.15 Amazon gift cards a month. Bleayh.

You can just copy and paste the code in your account and it just adds each one to your balance.  Would probably take 5-10 minutes a month for $450/year of interest.

No, it's considerably less when compared to my no-effort savings account and foregone credit card rewards. I ran through the math above. Also, time to log in and log out 4x per month.

A huge time sink? No.

There's also the hassle factor of having to make SURE you get all the transactions and logins done every month. Apparently you don't mind. It would irritate me.



You also neglected the 4 logins/month. Call that 2 minutes.

If this method floats your boat, great!

[kpd905]

Yeah, I haven't done it either yet just because I don't feel like going in and changing my direct deposit.  But for anyone that wants ~$200/hr for their time, it isn't too bad.