Community Banks Still Providing Top Interest Rates

December 27, 2008 by  
Filed under Financial Planning

Back in early September (before the really bad economic news started rolling in), I wrote about the excellent interest rates available at community banks.  Since that time there has been a lot of upheaval and change within the banking community.  A lot of that change relates to increased loan underwriting standards, making it more difficult to borrow money at the big banks, most of whom are stuck with bad balance sheets from bad loans.

Also, the personal finance blogosphere continues to give us a steady diet of this “deal” and that “deal” at the name brand online banks.  Unfortunately, those “deals” include shrinking interest rates.  So I thought I would take another quick look at interest rate deals at the community banks.  What I found is that there still plenty of comparatively better interest rates at many of your local brick and mortar banks. 

For example, one of the community banks I mentioned in September was F&M Bank, which was paying 5.02% on funds up to $25,000 held in its online checking account.  Almost four months later, the rate is still 5.02%.  This tells me that they are not teaser rates.

Reviewing other bank account options at CheckingFinder, one bank (Southern Missouri Bank) is paying 6.01%! 

There are some basic usage requirements for these accounts that I summarized in my earlier post but they are not unreasonable given the rates paid, with no account fees, refunded ATM fees, and no minimum balances.  Keep in mind also that these are FDIC insured and that you can open these accounts online and/or through the mail.  You do not have to be present to win!

When I first posted about community banks and their high interest checking accounts, Mr. ToughMoneyLove received some criticism from others who seemed obsessed with the name brands, such as ING Direct, HSBC, and the like.  That criticism was and is unfounded if your objective is to put money into a bank providing the highest yield and you are willing to meet some basic usage requirements to earn it.  On a deposit balance of $25,000, there is a significant difference between the 5%-6% offered by these community banks and the 2.75% that the name brands are currently paying.

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3 Responses to “Community Banks Still Providing Top Interest Rates”
  1. We used checkingfinder as well and found Community Bank of Pleasant Hill offering 6.10%. Of course, there are the usage fees but for that rate…no problem. :)

  2. Erik says:

    @Beef Up Your Piggy: I used checking finder to link up with my community bank and one of the selling factors was that there are NO usage fees. They do require online banking, direct deposit, and making a certain amount of debit card purchases.

  3. threadbndr says:

    My work credit union is offering 5.25% up to $50,000 with direct deposits, 12 credit card debit transactions, etc. But it’s close, and so I’m moving my accrual accounts and savings over there.

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