Opening Interest Bearing Investment Accounts

An interest bearing investment account is an investment for which you receive interest earned on a principal balance. It can be a checking account, savings account, certificate of deposit, money market account or other interest-bearing account. Interest bearing accounts require a larger minimum deposit to open an account than do non-interest bearing accounts. However, online banks typically require a lower minimum deposit than traditional brick-and-mortar banks. Monthly service charges are also lower.

Instructions

1. Shop and compare for the best rates. You want a competitive interest rate so that you can get the greatest return on your investment. Some types of investment accounts accrue interest daily, which is paid monthly. Short and long term deposit accounts featuring fixed rates may pay interest at maturity or semiannually.

2. Search for a bank that offers an interest bearing account with no annual fee, transaction fees or minimum deposit required. Some banks will charge a monthly maintenance fee if the account balance drops below the minimum required. In many cases, a minimum deposit of $1,000 is required to open a new account. An average service fee of $10 to $25 monthly may be charged when an account balance falls below $2,500.

3. Choose the type of investment account that is right for you. Consider the key features of different types of accounts. Find out if an account offers a guaranteed rate of return, bank interest rate, or earns interest at the prevailing rate. Determine whether a fixed or variable-rate account would be better to meet your needs. Variable rates typically offer higher rates of return but at more risk.

4. Invest with a bank where deposits are FDIC insured. Interest-bearing accounts can receive up to $250,000 coverage. If the balance in your account exceeds this amount, you may be able to transfer some of the balance to an account at an affiliate bank for additional coverage.

5. Select an investment account that allows unlimited deposits, withdrawals, or transfers, including ATM transactions.

6. Make sure that you will receive monthly statements showing the interest earned for the month, in addition to your banking transactions.

7. Complete and sign the required application form to open an account. You may be able to open an account online. Be certain that you fully understand what an account requires before applying.

Tips & Warnings

• Bank fees can reduce the earnings on some accounts. Penalties may apply for early withdrawals.