Online Banks Offer High-Interest Checking Accounts

Mar. 21, 2007 (KABC-TV) (KABC) -- Kira Botkin is a fan of her online bank. She has five savings accounts all earning a high yield. She just wishes for more services.

"I did kind of hope they would open a checking account someday," Botkin said.

That day has come. Botkin's bank recently rolled out high-interest checking accounts.

"I signed up for it basically the first second that I saw that I was allowed," Botkin said.

"You're seeing yields of three, four, sometimes five percent compared to a national average on a checking account that is currently 0.3 percent," Greg McBride, of Bankrate.com, said.

McBride says you can usually bank on other perks too, like no fees and no minimum balance requirements. That's what lured Botkin in.

"You can have $10 in there and it will still be earning interest," McBride said.

But McBride says these accounts aren't for everyone. You have to be comfortable with online banking and certain transactions are more complicated when you can't just walk into a neighborhood branch. Some e-banks don't issue checkbooks to write a check, which means you have to do things a little differently.

"Go online, type in the information, the bank prints out that check and mails it out to whoever you designate," McBride said.

And although you can have direct deposit for things like paychecks, other checks must be mailed in. Botkin likes the high-interest rate but hopes her e-bank becomes even more user-friendly.

"They're missing a couple of very core traditional features that I'd like to see, but I'm hoping that they roll those out in the future, and I can take advantage of that," Botkin said.

Before signing up for a checking account with an e-bank, remember there are no branches so you have to rely on ATM's to get cash. Make sure the bank has some ATM's in your area that don't charge a fee. With most, you can search on the bank's Web site for ATM locations in your area.

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