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Bank Accounts Paying Up to 4% Interest

There are payoffs for storing your money in an online bank—but more rules, too.

Even with the Fed swinging into action, savings rates remain minuscule, averaging just 0.16%. Yet some banks offer you much more—as much as 4%—if you follow certain rules.

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Online-only banks usually pay more than branch-based institutions. For example, Incredible Bank, which exists only in the virtual world, pays 1.2% on savings deposits from $2,500 to $250,000. But there’s a catch: Depositors who exceed six withdrawals or other types of transactions per month start to rack up fees.

For a 4.6% yield on up to $20,000, consider opening a rewards checking account at Consumers Credit Union, based in Gurnee, Ill. Rules include spending at least $1,000 a month on a CCU credit card, conducting 12 or more debit card transactions each month, and doing some banking online. Anyone can join the credit union for a one-time fee of $5.

Rates on most CDs can’t beat high-yield checking accounts. But CDs can make sense if you “ladder them up,” says Greg McBride, chief financial analyst at Bankrate.com. Take, say, $10,000 and split it into five $2,000 chunks, buying CDs maturing in one, two, three, four and five years. As each certificate matures, buy another five-year CD with the proceeds. If interest rates increase, you can take advantage of higher yields. “The landscape for savers won’t improve dramatically in the near term,” says McBride, but rates could be higher in a year or two. One good option now: a five-year CD from First Internet Bank of Indiana, yielding 2.1%. To find more deals, go to www.depositaccounts.com or www.bankrate.com. (Returns are as of March 31.)

Next: Municipal Bonds to Earn 1% - 3%

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