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Good deals return on high-yield checking

It's rare to find a article highlighting good deals in interest-bearing checking accounts. Our Spring 2005 Checking Account Pricing Study pegged the average minimum amount required to open an interest account at $445.54, and you needed to keep an average of $2,296 in the account to avoid fees. What did you get for keeping that money on permanent loan to your bank? A stingy 0.28 percent in interest.

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For most people, there's no need to tolerate such token interest. A growing number of banks such as ING Direct, Emigrant Savings Bank and HSBC Bank USA offer high-yield savings accounts that link to your checking account. You can keep money in the savings account earning respectable interest and transfer funds to your checking account as needed.

But for folks who shun multiple accounts, transferring money, etc., there are a handful of institutions that pay decent interest and don't make you keep a king's ransom in the account to earn it.

The highest-yielding checking account in the group we looked at is Internet Checking Plus at Presidential Bank. As with many of these accounts, you'll have to sign up online. But your reward is an annual percentage yield of 3.75 percent (stated yields are as of the date this article was written and are subject to change) on balances up to $25,000. Anything in excess of that earns 2.4 percent. It takes $1,500 to open the account and you'll need to maintain a balance of $1,000 to avoid monthly service fees. A monthly electronic deposit of $200 is required to earn the stated interest.

City National Bank of Taylor, Texas, is a small bank that's using the Internet to build its customer and deposit base. The bank's free checking account, Reward Checking, pays 3.45 percent APY on balances up to $25,000. It takes just $100 to open an account; there's no minimum balance; no monthly service charge; and the bank automatically provides next day refunding of all ATM fees -- no need to supply a receipt. Online bill payment is free, and you can link the account to another bank account. In return, you must have direct deposit of a payroll or government benefit check, and you must make 10 Visa check card point-of-sale transactions every month, not including ATM transactions.

"We try to offer products that remove the barriers that keep people from banking with a bank that's not in their hometown," says James Marek, vice president of retail banking. "We give them all their ATM fees back, and we have a high interest rate. It's a product line they'd expect from a super regional bank, but we give them the service that a community bank is best equipped to deliver."

As always, a checking account is only useful if it serves your needs and doesn't cost an arm and a leg in the process. It doesn't do much good to get a hefty interest rate if you have to pay for online bill pay or if there's a service you want and it isn't offered.

If earning interest on your checking account balance is important to you, these accounts are worth a look

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