With Interest

Bricks and mortar banks have one problem. They require people. Which means, they require heat, electricity, A/C, salaries, and so forth. It's expensive to run a physical bank. This means, when you save at a bricks and mortar bank, you get little interest.

With the trend to more Internet banks, banks like ETrade, ING (Orange Savings), and to a lesser extent Citibank (which has physical banks) have begun a competition to offer high interest savings/checkings/money market.

Where you might expect 1% or so with a bricks and mortar bank, these Internet banks can dangle nearly 5% interest in your face. Compare that to CDs in a bank, and you realize that 5% in savings that you can access whenever you want, vs. 3% in a CD you can only access once in a few months, and it doesn't take a complexity theorist to tell you that the convenience of Internet bank pays off.

One of the highest interest accounts I've seen is Etrade, which has accounts over 5%. They've been advertising it a reasonable amount. ING and Citibank are about 4.5 and 4.25 respectively. Citibank decided to up the ante, and offer two new accounts: Ultimate Savings Account and Ultimate Money Account.

The second account has more interest, but here's the catch. You have to spend money. They require two payments for bill pay (a month) before you can reap the high interest. That doesn't sound so good to me, so I went with the Ultimate Savings Account which only has a minimum combined balance.

Given my druthers, I'd rather just leave it in one bank that I like, and not worry about it. But if banks want to compete for my money, I should pay attention.