The deal: High-yield checking accounts include FDIC insurance and the benefits of standard checking accounts, with the bonus of higher interest rates.
The risk: Next to nothing, but there are additional restrictions.
Bankrate's 2010 High-Yield Checking Study spotlights high-yield programs with interest rates from 1.5 percent to 4 percent. However, the study shows these programs typically include monthly account requirements such as direct deposits and frequent debit card usage to earn higher rates.
The reward: An annual percentage yield, or APY, of up to 4 percent.
"It's a very attractive product for not only existing customers, but new customers as well," Brad Sturm, president and CEO of Coulee Bank in Wisconsin, says of his bank's Rewards Checking account.
Started in mid-2007, Coulee's Rewards Checking account pays customers a 3.33 percent APY -- a big increase from the bank's 0.25 percent rate on traditional savings accounts. Customers must meet three minimum monthly requirements to qualify for the increased rate: make at least 10 debit card transactions, receive electronic rather than paper statements, and have one direct deposit or automated clearinghouse, or ACH, auto debit transaction over $1.
Customers who fail to meet monthly checking account minimums still earn money, just at the slower pace of 0.1 percent, Sturm says. To find the best checking account rate, use Bankrate's rate table.
Bankrate's High-Yield Checking Study quotes rates as of March 2010, but has a list of banks that offer high-yield checking accounts.