Checking accounts, even those that pay a modest interest, are no place to park extra cash. Consider an online savings account by a virtual bank or an Internet version of a bricks-and-mortar financial institution.
Bankrate.com provides a listing of the top interest rates in the country. Once at the site, click on “compare rates” and go to high money market yield and savings account rates. In early November 2014, E-Loan offered the highest annual yield at 5.5 percent. A local bank near me, First Dakota Bank, on the other hand, paid 1.05 percent annually for its basic savings account. The rate increased to a whopping 1.26 percent for savings over $5,000.
Some banks require no balance minimums and a $1 deposit to open an account. Others demand initial deposits up to $25,000 and minimum monthly balances to earn high rates. Bank websites usually list fees for accounts that drop below the minimum.
Be sure the bank is insured by the Federal Deposit Insurance Corporation for all accounts up to $100,000. The FDIC’s website features a search tool to find an insured bank.
Few with check writing, but easy access
These accounts are designed for savings, not spending, so access is limited. Usually, the online account links to your checking account at your local bank, from which you can make unlimited deposits. Withdrawals from your online account to your external account are commonly limited to six each month and take about two to three business days to complete. A few banks also allow check writing or check card access, but the number of withdrawals are still restricted to six.