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Is a rewards savings account worth it?

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Need help saving money? Banks and new websites want to help you.

The U.S. personal savings rate is dropping. It was 3.9 percent in May 2012 versus 5 percent in June 2011, according to the U.S. Department of Commerce. So banks are getting smarter about winning over savers.

National and regional banks are wooing consumers with more cash rewards and incentives. And new websites are even offering lottery-like prizes for saving money. But are rewards savings accounts worth the trouble?

“In years past, bank incentives were toasters or iPods,” says Greg McBride, CFA, senior financial analyst at Bankrate. “Now it’s cold, hard cash. It resonates most with customers.”

Linking to rewards checking

Take rewards savings accounts that link to rewards checking, which give you more bang for your buck. SuttonBank of Attica, Ohio, offers a rewards savings account with a 0.75 annual percent yield on top of the linked rewards checking’s hefty 2.01 percent yield.

On the downside, many rewards savings accounts also ask for direct deposit or require set numbers of transactions, says Robert Laura, president of Synergos Financial Group in Howell, Mich. “Call the bank before you get too excited, and find out what’s required,” Laura says.

Banks handing out $100 incentives for moving a checking or savings account may require many transactions, Laura says. “Stay away from the teasers, and read the fine print,” he says. Still, Laura says getting $100 to move your savings account is a nifty gift. These days, it’s more than a month’s worth of interest on a typical one-year $100,000 certificate of deposit.

Are the incentives worth it?

So are these new savings incentives worth scooping up? Generally yes, Laura says. But don’t get blindsided by low yields or poor incentives.

To get the right rewards savings deal, ask these three questions before signing up.

Is the account tailored to your needs? The savings account should fit your lifestyle, McBride says. If not, you may incur fees you’re not paying now, dragging down returns.

How much are the savings rewards or incentives? McBride says before moving your savings account, do the math on incentives. For starters, the cash incentive is taxable, he says. When you add extra fees, such as ATM transactions, the investment may be less favorable, he says.

Savings incentives less than $50 also may not be worth it, Laura says. “Opt for money, not goods,” he says. And before ditching your present savings account, ask your bank to match the other bank’s yield.

Are you giving up yield to take savings rewards? If you’re not earning a good rate of return, keep shopping, McBride says. Top-yielding savings accounts now pay 0.8 percent — a good benchmark. Include online banks, credit unions and local banks in your search, since they may pay higher yields, he says.

For example, Minneapolis-based U.S. Bank has its START savings account program, which rewards you with a $50 Visa card when you reach a $1,000 savings goal. However, the yield is only 0.05 percent.

Save money, win a prize

New savings websites are getting creative, offering lavish gifts for saving. SaveUp is a free Web service that connects to your online bank account and rewards you for saving. For every dollar saved or used to pay down loans, you’re given one credit toward winning prizes that include luxury trips, gift cards, cars and even a $2 million jackpot.

“The goal is creating positive reinforcement,” says Priya Haji, CEO of SaveUp. “This is a fun way to stay engaged.”

SaveUp isn’t a bank, though. You register your bank account at the site, where 18,000 institutions are included. So far, SaveUp players have stashed away $55 million and paid down $30 million in debt, Haji says.

Website SmartyPig is a free online piggy bank. It offers savings accounts insured by the Federal Deposit Insurance Corp. With it, you can earn interest and 1 percent cash back on everyday credit card purchases. You also can enlist friends via social networks to help you meet set savings goals.

“Networking can help you stay conscious about your savings goals,” says Laura. “These new rewards will change the game for regular banks.”