1) Higher yields. While money market mutual funds pay almost nothing (0.21%, on average, in mid-April), several community banks are paying over 2% on money market deposit accounts. These accounts are backed by the Federal Deposit Insurance Corp. (FDIC), up to $250,000 per depositor per bank, which is true for all accounts at FDIC-member banks. Money market deposit accounts are liquid and safe, so you might want to consider them for your cash reserves now. At www.bankrate.com, you can search for the highest yields on all types of bank accounts.
Even higher yields are available at the thousands of community banks offering so-called “rewards checking,” developed by BancVue. Yields generally are 3% or more. First Robinson Savings Bank (www.frsb.com) of Robinson, Illinois recently topped the list with a 6.01% yield. Rewards checking accounts typically have no fees or minimum balances; you can find participating community banks at www.checkingfinder.com.
“Rewards checking works for some people but not for everyone,” says McBride. “To get the high yield, you usually have to agree to direct deposit of your paychecks, online statements, and use of the bank’s debit cards at least 10 times each month. If you use your debit card nine times in one month, your yield will drop sharply that month.”