Finding better interest rates on your deposits

Bankrate IncorporatedMoney and Monetary Policy

No question, interest rates on deposits are piddling. But banks still need to attract deposits, and savers can still find rates that are higher than average.

You'll need to shop around. Check out Bank rate.com, Bankaholic.com and BankCD.com for the highest yields around the nation.

Last week, the Bank of Internet USA in California offered an annual yield of 3.51 percent on a savings account, Bankrate reports. And Flagstar Bank in Troy, Mich., had a 1-year, high-yield certificate of deposit with an annual yield of 3.25 percent.

Use other search engines to find "reward checking accounts" at online banks that pay rates of 5 percent or more. That high rate typically applies to the first $20,000 or $30,000 in the account, with a lower rate applying to balances over those limits.

With a reward account, you usually must make at least one direct deposit each month and are limited to 10 or so debit transactions monthly. Statements arrive electronically.

If you are searching online for high-rate accounts, make sure the institution is federally insured, says Laura Bruce, senior reporter at Bankrate. (The more than 4,800 banks listed on Bankrate's site are all federally insured.)

To find out if a bank is insured by the Federal Deposit Insurance Corp., go to www. fdic.gov or call 877-275-3342. To check up on a credit union, go to www.ncua.gov or call 800-755-1030.

Remember, the increase of the basic insurance limit from $100,000 to $250,000 will expire at the end of the year. If you are locking large sums of money into CDs of one-year or longer, you could end up with some of your deposits uninsured, Bruce warned.

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