(Begin VIDEO with Kristin Arnold, Bankrate.com anchor introducing the video topic)
KRISTIN ARNOLD: In an environment of ultra-low interest rates, savers are looking everywhere they can to squeeze out better returns without risking their principal. An option that works well for some - but not all - is a high-yield checking account. Here to tell us about Bankrate.com's survey of high-yield checking accounts is Greg McBride, senior financial analyst for Bankrate.com.
(Cut to a double screen of Kristin Arnold and Greg McBride)
KRISTIN ARNOLD: What is a high-yield checking account, and how does it work?
GREG MCBRIDE: These are federally insured checking accounts offered by many smaller community banks and credit unions that will pay higher interest rates, about 2.5 percent, on average, provided that you meet certain requirements each month. Now typically, you're looking at having to do about 10 debit card transactions, have on direct deposit or automatic payment each month ... and get your statements online. Also, that higher yield is often limited - typically to the first 25,000 dollars you have in the account.
KRISTIN ARNOLD: And what happens if you don't meet all the requirements?
GREG MCBRIDE: There's a big price for falling just short. Let's say you make nine debit card transactions instead 10 - well then the interest rate you're going to earn becomes very pedestrian, about 0.1 percent on average, which is comparable to a traditional interest checking account. So, clearly these are accounts that are going to work very well provided that you can meet those requirements to a T month in and month out.
KRISTIN ARNOLD: How do this year's survey results compare to last year?
GREG MCBRIDE: Like other savings instruments, we saw the interest rates come down from a year ago. The average yield on these high-yield checking accounts - last year was 3.3 percent - this year is down closer to 2.5 percent. Even the default interest rate, which you earn if you don't meet the requirements, even that was down a little bit as well. But, that being said, these high-yield checking accounts remain the top yield in place for federally insured cash that you can get to at a moment's notice.
(Cut to one shot of Kristin on camera)
KRISTIN ARNOLD: To see more of Bankrate.com's high-yield checking survey, go to Bankrate.com. I'm Kristin Arnold.
(END VIDEO CLIP)