Where To Get A Bank Account That Actually Earns You Money

Choosing between 0.01 percent and 1.5 percent return on your savings. Some choice, huh?

Unfortunately, those are the options most consumers are presented with when deciding where to open a bank account today. Prior to the recession, banks were offering upwards of 4 percent interest on savings accounts, with some as high as 6 percent. Meaning, that if you deposited $1,000 in a savings account with a 6 percent yield, you’d earn $5 a month.

But that’s almost unheard of these days. Now, a “high” yield interest bank account is one that has an annual percentage yield (APY) of 2 percent or more, according to Bankrate.com^[1]. The personal finance site canvassed the country to find the banks and credit unions with an APY of higher than 2 percent, which is significantly higher than the national average of 0.01 percent yield on money funds.

Consider this: If you have $25,000 in a bank with a 2 percent APY, you’ll earn an extra $500 per year. By contrast, traditional checking accounts, with their average of 0.06 percent APY, will earn you just $15.

Keep reading to find out why rates are so low, and where you should store your money…

Why interest rates keep going down

As the economy goes, so do interest rates. When the recession hit, fewer people were opening businesses or taking out lines of credit, so banks were making less money. As a result, they couldn’t keep interest rates high on savings or checking accounts and maintain their profits.

But there’s another, higher-level reason, too: After the recession, the Federal Reserve lowered interest rates to almost nothing. That’s because they wanted to encourage consumer spending to revive the economy and new businesses to open and create jobs.

While this is all bad news for savers, those who keep a lot of cash in the bank, and risk-averse investors, it’s also good news for certain consumers — for example, homeowners. The national rates for a 15-year fixed mortgage right now is 3.17 percent, and 3.99 percent for a 30-year mortgage. That’s only a tiny bit higher^[2] than it was in 2012, when mortgage rates were the lowest they’ve been since Freddie Mac began keeping track of mortgage rates in 1971.

Auto loan rates fell, too: In 2013, the average interest rate^[3] for a new car loan was 4.27 percent, lower than it had been in five years. That led to a run on the auto loan market, causing some to speculate whether auto loans are the next housing bubble.

What you should do with your money right now

Keeping your money in a bank instead of giving it to Wall Street is safer, though potentially less profitable. Bankrate says to get the best interest rates on checking, you need to be doing one or more of the following:

• Use your debit card at least 10 times each month
• Receive electronic statements
• Have direct deposit
• Pay your bills online

Of course, most consumers already do these, said Bankrate’s chief financial analyst Greg McBride in a statement. The downside to high-yield checking accounts is that most of them have “balance caps” between $15,000 and $25,000, so make sure you know what the cap is before opening one. The average payout for balances above the cap is only 0.24 percent.

Here are the best high-yield checking accounts in the country. Note that No. 4 is actually the highest rate available nationwide:

1. Jeff Davis Bank
   Location: Jennings, Louisiana
   National? No
   APY: 3.25
2. Ouachita Independent Bank
   Location: Monroe, Louisiana
   National? No
   APY: 3.01
3. Coulee Bank
   Location: La Crosse, Wisconsin
   National? No
   APY: 2.55
4. Lee Bank
   Location: Massachusetts
   National? Yes
   APY: 2.5
5. BTH Bank
   Location: Quitman, Texas
   National? No
   APY: 2.25
6. Security Bank
   Location: Tulsa, Oklahoma
   National? No
   APY: 2.05
7. Cross Keys Bank
   Location: St. Joseph, Louisiana
   National? Yes
   APY: 2.05
8. Westfield Bank
   Location: Akron, Ohio
   National? No
   APY: 2.01
9. Bank Gloucester
   Location: Massachusetts
   National? Yes
   APY: 1.51
10. Community Bank of Pleasant Hill
    Location: Missouri
    National? Yes
    APY: 1.5