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Shopping For A Bank Account That Pays The Highest Possible Rate Of Interest

It's important to make sure you're getting the best value from your checking, savings, and money market accounts. This means shopping around before deciding which bank will obtain your business—just as one would shop for any other product.


Choosing a bank account wisely is a matter of comparing the features of accounts at various banks. The features that should be compared are:

  1. Interest rates
  2. Fees
  3. Limitations
    1. Minimum balances
    2. Minimum holding periods

Questions to Ask:

Obtain the best possible interest rate on an account by asking some questions before opening the account or switch from one bank to another.

  1. Can the bank change the rate after the account is opened?
  2. Does the institution pay different rates of interest depending on the amount of the account balance, and, if so, in what way is interest calculated? For example, an institution may pay a 4 percent interest rate on balances up to $5,000 and 4.5 percent on balances above $5,000. Another institution may pay interest on the entire balance of 4.5 percent. To tell which method an institution uses, check the annual percentage yield (APY) disclosure. If it is a single figure for a balance level, you will be paid the stated interest rate for the entire balance. If the APY is stated as a range for each balance level, your earnings will depend on the balance you keep in each level. Of course, getting paid the stated interest rate on the entire balance is a better deal.
  3. How often is interest compounded? In other words, when does the institution start paying interest on the interest already earned in the account?
  4. What is the annual percentage yield? (The APY is a rate that reflects the amount of interest you will earn on a deposit.)
  5. What is the minimum balance required to earn interest? Find out how the bank calculates the minimum balance requirement. A calculation that is based on the minimum daily balance is best.
  6. Is interest earned the day one deposits a check into the account—called "earning on the ledger balance"—or does earning interest begin later, when the institution receives credit for the check—known as "earning on the collected balance"?

Note that institutions may pay different rates tied to different balance amounts. It pays to shop.

For further information, contact Louis P. Stanasolovich, CFP™ at (412) 635-9210 or

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