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Answer:
Dear P. McFee,
You're
right on target. You might as well also have a checking
account that pays interest. Not all do, of course
and many of those that do, have low rates.
I
recommend that you begin your search with your current
bank. Visit its website or call customer service and
ask:
1)
Do you have an interest paying checking account?
2)
If so, what is the rate?
3)
What is the minimum I must keep in the account?
4)
What happens if I fall below the minimum?
5)
Up to what dollar amount is the account FDIC insured?
6)
What, if any, charge is there for checks?
For
example, I logged onto CitiBank and learned that its
interest-paying checking account rate is currently
0.25%. And, if you maintain a balance of $6,000 among
the bank's various (and specified) accounts, there
are no fees. In addition, you get free use of Citibank's
ATMs.
Online
Banks
This
probably won't come as a surprise to you - Internet
banks often have higher rates - rates that compete
nicely with money market accounts. They come with
some additional benefits in that most offer overdraft
protection, automatic bill paying and a debit card
so you can transfer money to pay for retail purchases.
On
the other hand, most do not accommodate ATM-made deposits.
(An exception described below.) In other words, you
must make your deposits in one of three ways: through
the mail, by electronic transfer or via direct payroll
deposit.
For
example, ING Electronic Orange Checking (800-ING-DIRECT,
www.ingdirect.com)
has impressive rates:
Balances
under $50,000: 4%
Balances of $50,000 to $99,999: 5.25%
Balances of $100,000 or more: 5.3%
ING
does not impose monthly fees, and ATM withdrawals
are free at the 32,000+ Allpoint network participants.
(Allpoint machines are located in retail stores.)
However,
there are no paper checks with this particular checking
account. You can e-mail money to someone's bank account.
Or, you can ask ING to print out a check and send
it for you.
Everbank
FreeNet Checking, (888-882-3837, www.everbank.com)
is also paying above average interest rates:
The
first 90 days: 6.01%
After that...
Balances under $10,000: 3.41%
Balances of $10,000 to $24,999: 3.45%
Balances of $25,000 to $49,999: 3.65%
Balances of $50,000 to $99,000: 4.15%
Balances of $100,000 or more: 5.01%
Although
its overall rates are not as high as ING's, Everbank
does accept ATM deposits. And it offers reimbursement
of up to $6 per month for ATM withdrawal fees.
Caution:
Unless you maintain an average balance of $1,500 in
your Everbank FreeNet Checking account, you'll be
hit with a $4.95 monthly fee for online bill payment.
Good
luck!
BUYandHOLD
does not recommend any securities. The security mentioned
above is being used for illustrative purposes only
and should not be regarded as an offer to sell or
as a solicitation of an offer to buy.
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