High yield checking accounts are still around in 2011

With all the ultra-low returns that we get these days, most people might think that the high-yield checking accounts are extinct but that is not true. There a number of high-yield checking accounts that is still very much around in 2011.

Account holders now have ample opportunities to earn from rewards checking or high-yield checking accounts. They can earn a higher rate of interest but on a capped amount of cash reserves, than what could be earned on any other typical account. This will have all the features of a normal checking account but account holders will have to meet some conditions regarding how their accounts are used.

In order to get a better picture of the high-yielding accounts at present, Bankrate surveyed around 155 banks, credit unions, thrifts etc., and studied their offerings on high-yield accounts in 2011. It found that nationally available high-yield checking accounts were shrinking and the yields on other deposit products were also going downward. But despite all of this, the high-yield checking accounts still have a lot to offer consumers, states Greg McBride who is the senior financial analyst at Bankrate.

He also added that these high-yield accounts continue to remain the best option for liquid cash that is federally insured.

Although the yields may have fallen from an average of 3.3% last year to about 2.56% this year, it is still a pretty good yield as far as savings are concerned. Declining yields are driven by forces that are also pushing the rates down on CDs and savings accounts etc. It is the same forces that are responsible for the decline in yields as well.This is because the demand for loans has come down and there is too much of cash that is available and bank deposits cannot be put to work, states Bert Ely, who is a banking consultant.

Deposits are very valuable and once the loan growth starts picking up, banks will want to have the deposits in the future. But as of now the bank’s coffers are flooded with cash.

Due to this phenomenon in banking, high-yield checking accounts are getting harder to find when compared to last year, states Ely. During the 2011 survey by Bankrate the number of high-yield checking accounts had only fallen from 58 to 57. But the high-yield checking accounts available nationally have fallen substantially to 27 from 41. According to McBride banks are getting more careful and are avoiding deposits from national customers.