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savings

Rewards for Saving

Even after the Fed's interest-rate cut, you can still find high yields.

All money-market accounts are not created equal. Yields on money-market mutual funds, which are tied to short-term interest rates, are dropping. Recently, the average yield was 4.56%, down from 4.62% before the Federal Reserve Board cut rates.

But rates on bank money-market deposit accounts remain high, with a number of banks yielding 5% or better. For instance, UFBDirect.com was recently offering 5.31%, and Zions Bank, 5.30% (see table on page 87). "Banks will be more deliberate in cutting rates to keep deposits coming in the door," says Greg McBride, of Bankrate.com.

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Consumers are accustomed to being offered rewards points when they spend money. Now Capital One is adding a new twist by offering mileage or cash awards if you save money. Capital One's Rewards Money Market Account yields a competitive 4.66% and sweetens the deal with bonus miles. If points are your thing, you earn one mile for every $20 of your average monthly balance. Miles may be redeemed for free flights, merchandise or cash. If you select the cash rebate, you'll receive $100 for every 10,000 miles you accumulate, adding 0.6% to your yield.

Deposit $500 within the first month after opening your account and you'll receive an extra 2,500 miles. Plus, Capital One No Hassle Miles Rewards credit-card holders can pool the miles they accumulate in both accounts.

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