Ways to beat the fed and earn 4% on your checking account
Although it is a well-known fact, the average checking account has a 0.1% yield. Federal Reserve Chairman, Ben Bernanke has also pretty much confirmed that there are no plans where Washington will be able to trigger a hike in rates anywhere in the near future. In its own words, the Federal Reserve has no plans to increase the Federal Funds rate for a long period of time. But with some small changes you can ensure that your cash will earn 40 times of what an average checking account can get you. According to the new survey conducted by Bankrate, on the high-yield checking accounts, there are a handful of banks as well as credit unions that are currently offering yields that are as high as 4%.
There are just around 27 banks as well as credit unions that have continued to offer high-yield checking accounts nationally, when compared to 41 last year. But more than that, the ones that are offering high-yield accounts has slipped even further – from 3.30% last year to 2.56% now. This is due to the Fed Reserve’s extended easing. But even a yield of 2.56% is much better than what you can earn on a 10-year treasury now because you are not exposed to any of the interest rate risk of the T-note when we finally have to pivot to another period of rising rates. Although there are delays after the latest reports from the Fed Reserve, there are certainly no cancellations.
But in the meantime, you can easily get up to 4% on your cash savings and that is much better than what Allan Roth found recently on a 7-year CD which is 3.5%. However, you will have to consider the tradeoffs as well.The rate gets locked in with the CD but the yield on the liquid savings account will continue to fluctuate due to the general rate trends or due a change in the financial institutions policy. However, when you combine the high-yield checking account as well as Allan’s recommendations of the high-yield CDs, it is surely a profitable combination.
But it is important to note that all of these high-yield checking account offers are not available nationwide. For instance, Capital Bank’s checking account gives 4% yield but is only for the residents of N.C. So, you should ideally look into ‘Bankrate’s 2011 high-yield checking survey’ and see what fits your requirements. Ensure that you understand all the terms & requirements fully well.
