Checking with 4.26% APY?

I receive a monthly newsletter from Dave Ramsey, a popular personal money-management expert and debt-free advocate.  April's version included a link to CheckingFinder.com, a free online service to help you find and compare free checking accounts from community banks across the country.  (Bank of America and Chase are not welcome!)

The highest interest rate I found was with a bank in Sugarland, TX offering a checking account called 'Kasasa Cash.'  Funny name, but after some research I found out that it is a special product offered by many community banks. 




The benefits of the account are:

• 4.26% APY* on daily balance up to $10,000
• 1.66% APY* on portion of daily balance above $10,000
• Reimburses all ATM fees nationwide**
• No minimum balance
• $100 minimum to open, no minimum thereafter
• Free online banking with bill pay
• Free Visa® debit card
• Unlimited check writing
• No per check charge
• First 50 checks free (singles or duplicates)

The requirements for receiving the 4.26% APY are:

• Log onto online banking at least once per cycle  (I already do all of my banking online; haven't set foot in a bank since college.)
• Receive your monthly statement electronically  (Yup, do this to.)
• Make a minimum of 10 debit card purchases (a month)  (Not a problem.)
• Have 1 direct deposit or ACH auto debit (a month) (Can transfer my automatic insurance payment to this account.)

If you don't meet the requirements one month, your interest rate for that month is reduced to 0.05% APY.  If you meet the requirements the next month, your interest goes back up to 4.26% APY.

This sounds too easy and too good to be true!  Do you realize that if you have $10,000 in this account for 1 year you will receive $426 in interest?  That's a lot more than the current rate of 0.65% that my current bank offers on savings accounts and CDs!  I plan on keeping our emergency fund in this account and conducting a few small transactions (Redbox rental, gas for the car, etc.) that would normally occur in order to meet the requirements.  I'll feel better about keeping our emergency fund in non-investments (as it should be) and will also consider opening up a second account so that we can split our emergency fund and receive the 4.26% rate on more of our money.

I applied for the account on Wednesday and am waiting for my account to be fully processed and opened up with my first deposit transferred from an account at another bank.  I'll let you know after a month how this goes and if meeting the 'requirements' really is as easy as it seems.