Are You Earning 4% on Your Cash?

IF YOU'RE EARNING less than 4% on your cash, well, you're just not trying.

Sure, the interest rates on most traditional checking and savings accounts are practically nonexistent. But competition from Internet-based banks has compelled banks and brokers alike to bid for consumer attention. "[Financial institutions] are very aware that consumers are getting smart about rates," says Adam Honore, a senior analyst with Aite Group, a financial-services research firm. It doesn't hurt that the profits financial institutions reap by moving account applications and maintenance online far outweigh the beefed-up interest rates they're offering.

The result: a bevy of high-yield savings, money-market accounts — and newest on the scene, even checking accounts for interest-hungry investors to choose from. Which is best? Here's where to bank and when:

Unless yours is one that offers a high-yield account, traditional banks are best used as a way-station to funnel savings to higher-yielding accounts, says Beau Brock, a certified financial planner based in Tulsa, Okla. "It comes back to the convenience factor," he says. Local banks have the advantage of in-person deposits and widespread ATMs. You can then transfer funds to a higher-yield online account.

That said, if your traditional bank happens to offer a high-yield savings or money-market account, you'd be a fool not to take advantage of it, he says. HSBC, for example, offers rates of 4.25% on its high-yield savings account; and you can link to an existing checking account. Transfers between accounts are instantaneous, enabling you to keep a low checking balance and put the rest of your cash to work. One caveat? Your online transfers may be limited. Citibank, for example, only allows six per month, but does permit unlimited inter-account transfers at the ATM.

We looked at which accounts offered the highest rates, with the lowest fees and the least restrictions. Here are the best rates, from highest to lowest: