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Everyday Cheapskate: Who Is Offering the Best Rates of Interest on Savings Accounts?

Mary Hunt on

Dear Mary: I'm looking for a place to earn the best rate of interest on my contingency fund, which is (drumroll, please) about $18,000 and growing.

Recently, I came across a "rewards checking account." It looks like a checking account that pays about 6%, when savings accounts in the same bank are at less than 1% annual percentage yield. Is this some kind of scam? -- Jason

Dear Jason: First, let me congratulate you on your very respectable and growing contingency fund! Everyone needs money they can count on in an emergency. Good job, and keep going!

Rewards checking accounts are the latest in creative products from banks and credit unions. Whether they're scams or not depends on how disciplined and clever the account holders are.

While I have not seen a rewards checking account paying the rate you quote in quite a long time, I'll take your word for it. I wonder if the message says, "If you meet the monthly requirements" in the fine print -- "if" being the operative word.

Before you get too excited about all the interest you can earn, know that rewards checking accounts come with very strict rules you must follow to earn that interest.


A rewards checking account is strategically connected to a debit card. To earn the interest, you must use the account a minimum number of times each month, using the debit card to make those purchases. If you fail to do this, you forfeit the rate.

And you must agree to receive your statements electronically. There may be other requirements as well, which you will find when you read the terms and conditions.

For me, the sticking point is that a rewards checking account must be used often enough to qualify for that great interest rate. That's fine if you keep a large sum in your checking account anyway and are not opposed to using a debit card.

Human nature being what it is, for you to put the entirety off your contingency fund in a place that makes those funds so easily accessible with a mandate to use it six or more times a month would be to create significant temptation. Just one slip up could cost you far more than the paltry amount of interest you might earn if you don't break any rules. For me, putting the money in a safe place that earns 0.05% annual percentage yield looks a lot better. Easier to manage, too,


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