Are high-rate checking accounts right for you?

July 15, 2010 4:26:50 PM PDT
Interest rates are lower than they've been in almost 50 years. So how do you get your money in the bank to actually grow? There are checking accounts that pay interest, higher in fact than most savings accounts.

Like many of us these days, Katrina Wright wishes she could bulk up her savings. But the interest rates on her checking account aren't doing much to make that happen.

"I only get one percent interest rate, which is not very good. It is convenient to use the checking account, but I'm not going to make any money from it," said Wright.

Consumer Reports Money Advisor looked at some community banks and credit unions that are paying much higher rates.

"Some of these checking accounts are paying 4 or even 5 percent yields. That's higher than many savings accounts or long-term CDs," said Greg Daugherty of Consumer Reports Money Advisor.

Of course, like most great offers, there are some catches.

"The rates plummet if you don't meet the bank's monthly requirements. Some drop to as low as .04 percent," said Daugherty.

To get the high interest rate on your checking account, requirements can include making 10 to 15 debit card purchases a month, paying some of your bills online and receiving online statements. There are also balance limits.

"Some of the accounts we looked at had balance limits of $25,000. Once you exceed that amount, the annual rates go down to around one percent," Daugherty said.

Consumer Reports says those high-interest rates may be worth the restrictions. But they're not for everyone.

"I can't be sitting here counting, 'Oh I need one more transaction to get a high interest rate.' People just don't have time," said Wright.

But if you can play by the rules, your money will grow a lot faster.

For a list of banks offering high-interest checking accounts and to read all the requirements, click on the links below:

Kasasa.com

CheckingFinder.com


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