We have been approached by a vendor who is offering a Rewards Checking program. The program pays customer a higher interest rate based on certain criteria (use of bill pay, required # of debit card transactions, etc.) We have been told by some sources that the Federal Reserve is currently reviewing the product because of some regualtory concerns. Have any of you seen the product or do you have any information pertaining to the regulatory concerns? Thanks!

I have not, and have not done any research, although it sounds interesting. immediately I think of Reg E as a concern. I know that you cannot require an employee, for example, to have a checking account at your bank in order to receive their pay checks through direct deposit. I am wondering if the concerns are based on those thoughts? I will be interested in others responses...

I have not heard of any such review. Relationship pricing has been around a long time.

We have this type of account, although we didn't buy the 'program' - we figured out how to do it in-house. Never had any problems with the regulators.

We are also looking at offering the same type of account. But we are looking at building in tiered rates based on the balance kept in the account along with the other critiera mentioned above. The only thing I can think of here is making sure the APY is calculated correctly. Should I be concerned with anything else?