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Cures for the ordinary savings account blues

September 06, 2012

| MoneyRates.com Senior Financial Analyst, CFA

Many savings accounts are a pretty plain-vanilla type of product. While safe and reliable, they're not always particularly interesting. Some banks, however, are offering twists on their savings accounts today that can make them a little more intriguing -- and possibly even more rewarding.

If you've grown weary of your no-frills savings accounts, here are four unconventional twists to watch for:

1. Relationship pricing

Banks are putting more emphasis than ever on looking at the total profitability of each customer relationship, so they often make special efforts at retaining the most profitable clients. So if you have a strong relationship with your bank, this may qualify you for a special savings account rate.

Banks are somewhat awash in deposits these days, so simply opening a large account may not be enough to get you special treatment. However, certain activities, such as having a high number of debit card transactions, may get the bank to look at you in a more favorable light. In any case, it pays to ask banks what their highest savings account rates are -- and how you can qualify for them.

2. Online benefits

It saves a bank money when its customers bank online rather than requiring paper statements and services at a branch. It's already been shown that online banks as a group tend to offer higher rates than traditional banks, which suggests that lower costs can translate into better deals for customers.

For their part, traditional banks often offer a fee break to checking account customers who bank online, and some are looking at segmenting savings account rates along similar lines. Ask your bank whether enrolling in any online services might do your savings account any good.

3. Rewards savings

Even the most competitive savings account rates aren't very exciting these days, but UFB Direct is trying to stir things up by offering airline miles as a reward for savings account customers. Rewards accounts are old hat in the credit card world, but they are new territory for savings accounts.

Sometimes reward features can muddy the waters for consumers, because they make it more difficult to do apples-to-apples fee or rate comparisons. However, UFB Direct is offering their travel rewards on top of a very competitive savings account rate, and that's the key: When the rewards are the icing on the cake rather than your main reason for choosing an account, they make a good deal even better.

4. Teaser rates

Teaser rates are eye-catching savings account rates that only apply for a limited time, such as for the first three months after an account starts. Unless you plan to change bank accounts often, the teaser rate has much less impact on your return than the standard rate over the long run, so that standard rate should be your main criterion for choosing an account. Only consider teaser rates as a tie-breaker between two or more otherwise evenly matched accounts.

Creative twists on traditional savings accounts can spice up the market a little bit, but not always to the benefit of consumers. Sometimes there is a fine line between a helpful innovation and a marketing gimmick. It always pays to look past the dazzle and do the math. Only then can you decide whether any of these new twists would really benefit your savings.

If not, you may be better off with that plain-vanilla savings account.

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