We’re witnessing a historical rise in rates, which could cause unexpected deposit runoff for banks that aren’t prepared. Getting core deposits from reward checking accounts offers an advantage over CDs while lowering expenses dramatically.  

Offer a high rate. Without the high cost. 

High-yield checking accounts allow you to offer a higher rate and actually save money compared to other deposit vehicles — with the added benefit of creating primary financial relationships, which lead to more non-interest income and more loans. 

Kasasa partner institutions are increasing their high-yield reward accounts to 4-5% because they know their true costs will be less than 1.5%. Continue reading to see how it works through a data-driven cost comparison of a CD vs a high-yield checking account. 

Inside the numbers. 


Let’s say your institution is looking to increase deposits by $10 million. And let’s use a 4.0% CD rate as compared to a 4.50% Kasasa Cash® account. A 4% rate on a two-year CD gives you an annual cost of $400K.         

Kasasa Cash offers an even better rate of 4.5% on a much more liquid product. Logic would assume that this rate will cost you $450K annually but applying this simple math to Kasasa Cash doesn’t account for the unique product design and strategy that brings added annual savings, reducing the true costs of the deposits. 

Not magic, just math. 

The unique product design of Kasasa Cash, along with the expertise and guidance of the Kasasa team, allows community banks to pay less than they would with a CD.   

While the CD’s Cost of Funds stays at 4%, Kasasa Cash’s COF drops significantly because not all account holders qualify for the promoted rate. In this example, those that don’t qualify only receive 0.05%. Those that do qualify will only receive 0.25% for any balances above the predetermined cap of $25K. This brings the COF down to 2.30%, lowering the annual expense from $450K to $230,160 — a savings of $219,840. 

But we’re not done yet. 

You’ll also be earning non-interest income from debit card transactions of account holders who have to complete the qualifying behaviors each month. In this example, the accounts generate $151,559 in non-interest income.  

Although Kasasa Cash has some non-interest expenses (in this example, $53,371), you’ll also be saving money on consumers using e-statements.  Bringing the annual expense down to $131,972, and your effective cost of deposits down to 1.32%. Which is $268,028 less than the 4% CD. 

A deeper look at the numbers.

Nationwide, reward accounts powered by Kasasa provided a 64% median “discount” on COF in 2022.* See how these reward checking accounts work to lower your annual expenses by downloading the eBook — Playing offense and defense in a rising rate environment.  

Curious how much low-cost core deposits your institution could grow? This calculator [BW1] can help determine your true cost of deposits and the annual expense savings you’re missing out on with CDs versus a high-yield reward checking account.

*Kasasa analytics, 2022