For those who are not interested in reward checking accounts, your options for a liquid bank account with the best yield is either a savings account, money market account or a regular checking account. Unlike the reward checking account, these other liquid accounts don't require any work. The only thing to watch out for is an inactivity fee after a year or more.
One thing that I found interesting is that the top 3 non-reward liquid accounts available nationwide include both a savings account, a checking account and a money market account. As of 1/11/2011, these 3 accounts and the rates include:
- 1.75% APY Mega Money Market at AmericaNet Bank and Evantage Bank, No minimum balance, Maximum balance $35,000 (1.00% APY for portion above $35,000)
- 1.51% APY Elite Checking at Morrill & Janes Bank, Minimum balance $1,500
- 1.41% APY Savings Account at SFGI Direct, Minimum balance to earn interest $1
Money Market Account
Before internet banks, the money market account typically offered the best yields for liquid bank accounts. These were typically tiered-rate accounts that offered the best yields for large balances. A monthly service fee was also common unless you maintained a minimum balance.
With internet banks, there is no longer much distinction between savings accounts and money market accounts. That's the case for the Mega Money Market Account at Evantage and AmericaNet Bank. It has has no minimum balance requirement and no monthly maintenance fees. Unlike some savings accounts, you can use a debit card which can also be used as an ATM card.
The unique thing about the Mega Money Market account is that it only has the best rates for small balances. The portion of the balance over $35K currently only earns 1.00% APY. It's opposite of the old money market accounts.
The current 1.75% APY took effect last November. Before that the 2.00% APY had held since May 2009. I have a few more details about this account in my October review.
In the past a regular checking account wouldn't be considered as an option. It was always assumed that a money market account or savings account would have the best rate. In the last couple of years, that has changed. There have been a few banks and credit unions like Incredible Bank and Alliant Credit Union that have offered top rates on their checking accounts. However, it should be noted that these special checking accounts often have a few differences than a traditional checking account. For example, to get the top rate on Alliant's High Rate Checking, you're required to have monthly deposits. At Incredible Bank, you can't write paper checks. To write checks, you have to use the online bill pay. Also, for both accounts, you have to choose e-statements rather than paper statements.
For Morrill & Janes Bank, its Elite Checking account also requires e-statements, but that's the only requirement. There is a monthly fee for balances that fall below $1,500.
There were concerns that the high rate wouldn't hold up, but it has been 3 months since I first reviewed this account, and the rate has remained the same. The bank also offers a savings account called the Treasury Index account which also has a 1.51% APY as of 1/11/2011, but this requires a $25K minimum balance.
The typical internet savings account is designed to be simple. It has no minimum balance requirements and no monthly service fees. There's just one interest rate that's good for all balances. The only way you can deposit and withdraw funds is to link the account to an outside liquid account. Then you can initiate ACH bank-to-bank transfers. There's no ATM card and no check writing.
That describes SFGI Direct's Savings Account. It's a typical internet savings account except that it currently has the best rate. My last review of this account was in December. My first report on the account was in July 25, 2009. The bank was careful not to let SFGI Direct grow too fast. Twice it stopped accepting new account applications. For most of 2010 the account was closed to new customers. It finally reopened the account in October. We'll see how long it'll stay open to new customers now. Banks sometimes choose to reduce deposit growth by lowering rates. Stopping new applications is a better approach in my opinion.