Hungry for deposits, some banks are offering savers a better deal on interest rates

For savers, times are getting good and may get better still.

Increasingly, federally insured banks are offering attractive yields not only on certificates of deposit but on totally liquid savings and money market deposit accounts.

Some rates are good for a limited time, such as six months, and/or require a large balance, such as $25,000. But opportunistic savers can enjoy liquidity and safe yields that approach and at times surpass the yield on the 10-year Treasury note (about 3.7 percent as I wrote this).

"Banks are hungry for deposits because of the credit crunch," said Greg McBride, senior financial analyst for Bankrate.com.

Over the next 12 months, he said, "the environment for savers looks much more promising" than in the past year, thanks to expectations of moderating inflation.

But to get the best bank yields you have to shop around, he said. "Settling for average involves leaving a lot of money on the table."

I've shopped around, comparing yields at websites such as www.Bank rate.com, www.bankaholic.com, and www.bankcd.com and doing Internet searches for "high yielding savings accounts."

As a rule, the best deals come from online savings accounts that let depositors transfer money to and from their checking account (even if the checking account is at another bank).

I have one such savings account that has paid 3.5 to 3.75 percent the past year. To withdraw money, I move money electronically to my checking account, where it is available the next day.

Online savings accounts offer the same Federal Deposit Insurance Corp. protection as accounts at regular banks. Even if a bank operates only online, "if the institution is FDIC-insured, there is no need to worry," McBride said.

The FDIC insures principal and interest in deposit accounts - including checking and savings, money market deposit accounts, and certificates of deposit - up to federal limits.

Depositors may qualify for far more than the basic $100,000 in coverage at one insured bank if they own deposit accounts in different "ownership categories," such as single, joint, retirement, and trust accounts. (For details, go to www.fdic.gov).

The FDIC put out a statement last month to reassure the public its guarantee is ironclad and that nobody has ever lost a penny in insured deposits. Still, if a bank fails, the institution that takes over isn't obliged to continue paying the high yields often offered by failing banks.

My strategy is to spread deposits around to keep within the FDIC insurance limit and, being mindful of a bank's financial condition, to shop for those that consistently offer the highest yields.

You can look up a bank's "Safe and Sound" rating at www.bankrate.com.

Humberto Cruz is a columnist for the South Florida Sun-Sentinel. He can be reached at AskHumberto@aol.com.