Earning interest writing checks. The current instability in the financial and credit markets is leading many banks to entice consumers with something most of us don't really think about: interest-bearing checking accounts. They've been around for years, but now they're attracting more interest from investors because some are offering rates that beat the national money market average. Didn't someone famous or smart, at least say that every crisis bears within in it the seeds of opportunity?
Interest-bearing checking accounts are, you guessed it, checking accounts which pay an interest dividend. They come with strings attached, of course you'll almost always be required to maintain a minimum balance in order to avoid monthly fees, for example, and if you end up paying those fees, it could erase the earnings you were just overjoyed to see on your balance. Not only that, but as banks scramble to increase their profit margins, the price of ATM, overdraft and monthly service fees have all spiked. Another important consideration for many people will be the fact that the best rates will be offered for those with the biggest deposits. ING, for example, needs $100,000 in order for you to qualify for their 3.05% rate. Most of us deal in smaller sums than that. (OK, a lot smaller.)
Like we said, however, banks are looking for more customers and more money, and some have begun offering very attractive rates for their interest accounts. One, First Federal Bank of California, is offering a 4.16% rate on its interest-bearing accounts to California customers. Another in the New York City area, E Trade Bank, offers a 2.9% rate. Who knew you could save money come to think of it, who knew you could make money on a checking account?
Interest-bearing checking accounts just might turn out to be an unexpected growth area resulting from the current financial uncertainty.
