Best Interest Rates Offered by Little Guy

NEW YORK (TheStreet) -- The best rates for certificates of deposits (CDs) and checking and saving accounts are offered by small banks often based in the middle of nowhere -- or literally nowhere, as in, the Internet.

JPMorgan ( JPM), Citigroup ( C), Bank of America ( BAC), Wells Fargo ( WFC), Regions Financial ( RF) and Fifth Third ( FITB) don't come close, even though taxpayers gave tens of billions to the biggest banks during the financial crisis.

"The large banks are swimming in deposits," says Bankrate.com senior financial analyst Greg McBride. "Consumers are still risk-averse, so a lot of money has flowed into banks with no effort on their part. But smaller banks that have a need for deposits -- what is the most effective way for them to build deposits? Build more branches? That's expensive. Make acquisitions? That may not work. Compete toe-to-toe with the banking heavyweights in marketing? No. They pay attractive yields and market themselves over the Internet."

CDs are yielding, on average, 0.71%. The picture doesn't get much brighter for checking (0.13%) or savings (0.2%) accounts.

So where can you get the most bang for your buck? Consider smaller banks, says McBride.

In fact, banks offering the highest yielding accounts -- we're talking 4% -- include American National Bank in Nebraska and Iowa and Capital Bank in North Carolina. These reward checking accounts, however, require that you meet stringent requirements, like using your debit card 10 times a month, receiving statements online and having one direct deposit.

For better rates, be willing to do online banking. "Online has broken down a lot of the geographical barriers," says Richard Barrington of Money-Rates.com. "Before, you were usually limited to what had branches near your town. Now you can access more products online. There could also be higher incentives for online banking."

SmartyPig.com, for example, will offer starting May 19 2.15% APY to online savings accounts holding less than $50,000. And the incentives aren't necessarily calculated in basis points. PerkStreet.com is wooing customers with 2% cash back for six months, eventually lowering that to 1% for a $25 account.

Still, if you're on the hunt for interest and seek a bit of name recognition, here are some of the best rates out there right now. Just remember: They are subject to change on a daily basis so call your local banks and look out for sites like Bankrate.com and Money-Rates.com.

Checking in: Interest-bearing checking accounts can be hard to find unless you're willing to deposit at least $1,500 in most banks. So the more you're willing to stash in the account, the higher the rate can be. FNBO Direct is offering the best rate at 1.25%, with a $1 minimum. ING Direct is also offering 1.25%, for its Electric Orange accounts with at least $100,000, and 1.20% for an account worth $50,000. A close fourth is Ally Bank, at 1.15% for a $15,000 account.

Saving more: Rates are a little better when it comes to savings accounts. While many banks are still offering 0%, some are making it worthwhile to save. Topping the list is Capital One's ( COF) CapitalOne Direct Banking, with an APY of 1.35% for a $2,500 account. American Express' ( AXP) American Express Bank clocks in at 1.3% with no minimum, while Nationwide Bank requires a base of $1,000. Ally is offering 1.29% APY for no minimum, and EverBank at 1.26% for a $1,500 account. FNBO Direct, meanwhile, is promising 1.25% for an account of only $1.

Certified to make money: Certificates of deposit seem like a safe money bet -- maybe too safe. Money-Rates.com's Barrington recommends holding off purchasing CDs of more than one year as interest rates will likely increase this year. The highest rate for a one-year CD is from American Express Bank at 1.5% APY for a $0 deposit. Discover Bank is also offering 1.5% but for a minimum deposit of $2,500, while Ascencia, a division of PBI Bank, provides 1.5% for a $500 deposit. A shade lower is Ally Bank at 1.49% for $0 down.

Lan Nguyen is a freelance writer based in New York City. She has written for the New York Daily News, The Wall Street Journal, Worth magazine and Star magazine.

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