Update: The current top yield for the Max-Rate Checking is 3.25% APY as of 6/28/08 (The rate has held up better than the rates of the checking accounts at Charles Schwab, ING Direct and Salem Five Direct).
E*TRADE Bank increased the yield on its new Max-Rate checking account from 3.25% to 4.00% APY. The rate now makes it competitive to what ING Direct offers. However, unlike ING Direct's Electric Orange checking account, the Max-Rate checking has a monthly fee of $15 unless you have a $5k balance or maintain a direct deposit of $200 or more per month. Another downside to the Max-Rate accout is the $5k minimum in order to earn the 4% APY. Below this, the rate falls to 0.50%.
It does have a few advantages over ING Direct's Electric Orange such as paper checks (with first order free) and unlimited ATM refunds. E*TRADE also has a much more flexible ACH transfer service that makes it much easier to link accounts at other banks.
There's also a $75 sign-up bonus for this Max-Rate account, however, today is the last day (see post). If E*TRADE does what it has in the past, a similar bonus will return in a few weeks.
In my opinion, there are better choices for checking accounts. ETrade's bonus page compares Max-Rate to the regular checking accounts at Bank of America, HSBC, Chase and Citibank. It should compare it to the checking accounts at other online banks and brokerages. In addition to ING Direct, there's also UnivestDirect which has a 4% APY checking without fees or minimum balance requirements. SalemFivedirect currently is offering 5% APY and higher on its eOne checking account. Brokerages like Charles Schwab and Fidelity now also offer checking accounts with no monthly fees and with very competitive interest rates. And don't forget the reward checking accounts where you can get over 6% APY if you don't mind regular use of your debit card. For more info on these other checking account options, please see my best checking account post.
Thanks to the reader ShraZZy who mentioned this rate update in the finding deals post.