Interest Checking Allows Bank Clients to Earn Interest on Easily Accessible Cash

Typically, we associate savings, CDs or money market accounts with earning interest on our money. But that means the finances are less quickly available. With interest checking money is as accessible as a traditional checking account but it earns interest as well. Think of it as blending a checking and savings account. Given the low interest rates these days, interest checking may be a viable tool for those wanting to make the most of their cash any way they can.
When choosing an interest checking account, take a look at how much interest is being applied to the account. There are some that will pay as much and perhaps more than a savings account while still providing access to the cash via a checkbook and debit card. Choosing an interest checking account that also includes online banking is another beneficial way to manage finances. With it, bank clients have greater management control including 24/7 access, the ability to view account balances, execute transfers, and make online bill payments to entities such as a utility or cable company. With direct deposit, funds can easily be directed to both interest-bearing checking and savings accounts. The interest checking account may also be a viable option for making electronic mortgage or other scheduled payments. Why not generate some additional income on money that has to sit in the account each month anyway?
Traditionally, bank clients had to make a tradeoff between having access to their cash via a checking account or a higher interest-earning savings account. With interest checking accounts, clients have the ability to make withdrawals, write checks or use their debit card while at the same time earning a competitive return.
There may be some restrictions applied to interest checking accounts of which to be aware. Before opening such an account, consider first your needs. How will the account be best utilized? For instance, there may be minimum balance requirements. Will frequent use of the account compromise the ability to maintain the minimum balance? Interest checking accounts may not be the best choice for daily use. In fact, the account may allow only a limited number of transfers in the account per month. So this may not be the best choice for daily use. However, as mentioned before, it might be a good choice for those who need access to the funds but on a limited basis.
The two most available types of interest checking accounts offer different features. The first, a more general type of account, features basic checking privileges while paying interest. The second, called reward checking, feature more restrictions but offer higher interest yields. Some even offer higher returns than long term CDs in some cases.
Reward checking can be a great deal for bank clients who meet specific qualifications. Some restrictions to qualify include setting up direct deposit and receiving only online bank statements. Statements are not mailed to clients. The use of a debit card may be restricted to only 10 times per month, for example. Most clients will have to actually visit the bank in person to set up the account. Some reward checking accounts also allow earnings on a portion of the deposits; perhaps the first $25,000, for instance.
For those who would rather not deal with those types of restrictions, there are alternatives which feature the advantages of a checking account while still earning a competitive return. These days, consumers are looking to make a solid, no-risk return on their funds. Interest checking is an attractive choice which may complement a client's overall portfolio.
About the Author
AmericanMomentumBank.com provides a wide array of personal banking and business banking options and banking solutions tailored to your individual needs. For more information, please visit AmericanMomentumBank.com.

What Are Toxic Assets?

The term "toxic assets" is tossed around quite a bit these days, especially now that the Treasury Department has announced plans to buy up U.S. banks' bad assets to the tune of $1 trillion dollars (more on that in a minute). Terms like toxic assets have become common place, like the terms mortgage meltdown, financial crisis and economic stimulus. But does the American public understand what these toxic assets really are?

Let's say you bought a house for $300,000 dollars and Bank A gave you a mortgage for that house for the full $300,000 at 6 percent interest. There was no down payment, so the only collateral the bank has is the house itself. Shortly after the purchase, your house is appraised for $325,000 and the bank's "asset," a.k.a. your house, has increased in value. Bank A packages together several of these seemingly lucrative assets and sells them to Bank B and Wall Street investors in what are called mortgage-backed securities.

Unfortunately, your house is appraised again a year later for only $255,000. Multiply this scenario millions of times and you have what is known as a bank crisis due to the no longer lucrative mortgage-backed securities. The mortgages backing these securities have lost value and thousands of homeowners are defaulting on these mortgage loans. The bank is left holding the bag, or rather the bad debt. These "assets" are no longer valuable and are "toxic" to the bank, corroding the bank's inherent value and compromising its ability to make loans.

There is nothing the banks can do about all these suddenly less valuable loans, even with most homeowners continuing to make payments. Let's say Bank A sold Bank B a bundle of mortgages that were collectively worth $300 million, made up of 1000 loans just like the no-money-down, $300,000. If all of these loans decreased in value by 15 percent, as in the example, the bank is out $4,500,0000. Again, imagine this on a nearly trillion dollar scale.

According to the Minneapolis Star Tribune, "When the banks -- such as Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. -- started writing down the value of the securities, they reported billions of dollars of losses. Their capital eroded, and they didn't have the money to make loans. An estimated $2 trillion in bad assets are now on banks' books."
Treasury Secretary Timothy Geithner's solution to this huge financial fiasco is called the Public-Private Investment Program. In a letter to the Wall Street Journal, Geithner explained, "The Public-Private Investment Program will purchase real-estate related loans from banks and securities from the broader markets. Banks will have the ability to sell pools of loans to dedicated funds, and investors will compete to have the ability to participate in those funds and take advantage of the financing provided by the government."

This apparently made sense to Wall Street and the stock market leaped the day Geithner released the details of his plan. What it boils down to is that the FDIC and the Federal Reserve will make capital available to allow investors to buy up the so called toxic assets, thus getting them off the banks' books. The government will have much greater stake than any private investor. Geithner assures the American public that "the Public-Private Investment Program will ensure that private-sector participants share the risks alongside the taxpayer, and that the taxpayer shares in the profits from these investments."

About the Author
Ki works as a realtor in the Austin real estate market. His website offers a graphical search of the Austin MLS. He also provides information on Austin real estate and Austin commercial real estate.