Clark Howard's Tips

New Fidelity and Schwab checking account options

November 20, 2007

People have about a trillion dollars sitting in lousy checking accounts at banks. They're being hit with a lot of arbitrary fees for transactions and they're not getting a lot in return.

The typical bank pays about .1 percent interest on such accounts -- that's one tenth of one percent. Bank of America, meanwhile, pays about .05 percent -- one twentieth of one percent interest! So Clark had been advising people to seek out a checking account from the online banks that pay higher returns.

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But if you don't like putting your money in cyberspace, Fidelity Investments and Charles Schwab are now offering great checking account options too.

Fidelity pays 3.5 percent on its mySmart Cash Account, while Schwab offers 4.25 on its checking account. You don't have to be an existing customer of either firm to participate. These options are FDIC insured and there are no fees, no minimum balance requirements and no ATM fees.

Meanwhile, Clark's beloved credit unions are in this respect much like the conventional banks; they also offer puny interest rates. His credit union does, however, have one free checking option that you must ask for -- and it pays 4 percent interest. The bottom line is that you should consider switching your checking account if you're not happy with how your bank handles it.

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