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Finding the Best Bank Deals and Offers

March 12, 2009

By Clark Schultz | Money Rates Columnist


The Federal Reserve has lowered short-term interest rates to record lows, which has in turn prompted banks to lower rates on savings accounts, money market accounts, checking accounts, and certificates of deposit. Some Americans have given up on their bank accounts and are allowing their bank to essentially borrow their money for free. This is a mistake because it is still profitable to search for the best rates, deals, and offers. For example, the money market savings account listed today at a major bank in California is earning an APY of 0.05%.  Thousands of this bank's customers have some money parked in this account with little regard to the lousy rate. And by the way, as is typical of the major banks, if you don't maintain at least a $3,500 minimum daily balance or set up auto-transfers from another account at this bank, you will be charged a monthly fee.


On the other hand, the best money market rates listed on MoneyRates.com are earning well over 2% and do not include monthly maintenance fees. So for bank customers who park their family's cash in money market accounts, the difference between the low-yielding money market at the nation's largest banks and one of the money market accounts listed on MoneyRates.com can be hundreds or even thousands of dollars a year.


Free Cash, Airline Miles, and Gifts

Beyond finding better interest rates, you can also search for the best incentives that banks offer for opening a new account. Competition between online banks has created a variety of enticing free giveaways including cash, frequent flier airline miles, iPods, gift cards, gas cards, and cash-back check card offers. The MoneyRates Bank Deals page lists many of these bank promotions with details on some of the restrictions and limitations that may apply. The value of the bank incentives can vary from $25 to $250 and in some cases will be reported as taxable income by the bank.  One way to evaluate these deals is to consider the quick rate of return they can offer. For instance, consider a bank customer with $1,000 in a checking account at their local bank who switches their account to a FDIC-insured bank in another state that pays them a $100 bonus for opening a new online checking account. This works out to a quick 10% return. Where else are you going to earn that rate of return and have it FDIC-insured?


Reward Checking Accounts

The buzz around reward checking accounts has increased now that the 5% and 6% rates being offered on these online checking accounts are more attractive than ever. A reward checking account is designed for people who are willing to bank online and meet monthly requirements like direct deposit or check card usage in order to qualify for the highest APY. Typically, the top-tier APY only applies to balances up to $25,000, although some banks extend that to $30,000, $50,000, or even $100,000. You can find the latest information and rates on reward checking accounts posted on MoneyRates.com.


Bank Savings and Money Market Accounts

The advantage of savings accounts and money markets are that these accounts are liquid. This means you have access to your money without penalty or delay.  In addition, by not locking your money up in a fixed-maturity investment like Treasuries, bonds or CDs, you can quickly take advantage of new bank deals when interest rates do increase. Finding the best savings accounts and money markets is easy. Search for a bank with no minimum fees, no minimum balance requirements, and an interest rate you can live with while you wait for interest rates to increase. Happy searching!

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