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High-Yield Accounts: What You Need to Know About Before Signing Up

February 6, 2013
The Intelligencer / Wheeling News-Register

If you need to keep your money safe and still have access to it when you need it, a high-yield checking or money market account can be a good vehicle for accomplishing both goals.

High-yield checking and money market accounts often pay more interest than the national average, but to get those rates you might have to meet a number of different requirements.

Direct Deposit

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In many cases you will be required to establish a monthly direct deposit. If you fail to set up a direct deposit within the specified time of opening the account, you might be subject to a monthly maintenance fee.

You could also forfeit the higher rate of interest and earn a much lower rate, or earn no interest at all.

Debit Card Transactions

Many high-yield checking accounts require account holders to make a minimum number of debit card transactions per month. The number of required debit card transactions can be quite significant, often 10 or more transactions per month.

Before you sign up for a high-yield account, you should first look at your current spending patterns and make sure you can meet those debit card transaction requirements.

Minimum Balance Requirements

High-yield checking and money market accounts often come with minimum balance requirements, and those minimum balances can be higher than those on traditional bank accounts.

In addition, some high-yield checking accounts limit the amount of money you can earn the highest rate of interest on. For instance, a high-yield checking account might pay the highest rate of interest on the first $25,000, but a much lower rate of interest on balances above that amount.

Tiered Interest Earnings

You need to be aware that if you fail to abide by any of the requirements set forth in the account agreement your interest rate could drop sharply, or disappear altogether.

For instance, your checking or money market account might promise a great interest rate if you meet all of the monthly requirements, but only pay you a tiny amount if you fail to meet all of those requirements for the month.

It is important to look closely at the fine print and make sure you understand all the details before you sign up for any high-yield checking or money market account.

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