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I said in a previous post that I was going to discuss some of the promotions that banks and credit unions around the state are trying to use to attract deposits. BECU is the largest credit union in Washington State at over $8 billion dollars in deposits. They were one of the first companies that I can recall that created and heavily advertised any sort of accounts with super high rates. Let’s take a look at the programs that they offer.

BECU currently offers what they call the Member Advantage account. Essentially these are enhanced savings and checking accounts that pay a substantially higher rate provided certain criteria are met.

For Member Advantage savings accounts, members earn an APY of 7.5% on the first $500, and 1.76% APY on all balances above that. If you only have regular savings, you will earn 1.76% APY on your entire balance. It sounds like a big deal, but the Member Advantage will only get you ((7.5% - 1.76%) x $500) an extra $28.70 per year irregardless what your savings balances are.

Member Advantage checking accounts earn 7.5% APY on the first $500 and then .5% on everything above that. Regular checking earns .5%. Having the Member Advantage checking account will earn you ((7.5% - .5%) x $500) an extra $35 per year.

So what do you have to do to qualify to get Member Advantage and potentially earn an extra $63.70 per year?

Here are the official requirements:

• Open both a BECU Savings and Checking account
• Sign up for free eStatements instead of receiving paper statements in the mail
• Sign up for one or both: Free online Bill Payment and make at least one payment a month and/or a recurring Direct Deposit into your BECU Checking account
• You must continue to meet the qualifications to remain eligible for Member Advantage benefits

Basically as long as you use paperless statements and either have direct deposit or use bill pay, then you will be eligible for the enhanced account. Like any account, rates are subject to change and can have an affect on any stated earnings here. To see the current requirements on the official BECU site, click here.

In a way to raise deposits, credit unions and banks have started coming up with clever ways to get people to bring more deposits to them. The majority of these plans come in by way of offering higher rates in turn for some sort of favor on your part.

This is how the typical deal looks.

The institution will advertise an abnormally high rate given our current market conditions. This typically runs somewhere between 5% - 8%. There are typically a few catches though.

• The high rate is usually paid on only a set amount, like the first $1000 for example
• Many require you to have direct deposit through them
• Most require that you are signed up for some sort of online banking feature (usually eStatements, or logging on a certain number of times each month).
• Some require that you do a certain number of debit transactions each month.
• Other interesting rules exist as well.

If you are willing to follow the rules that they set forth, you can find yourself earning a decent interest rate, especially given current market rates. Over the next few weeks I am going to review some of the major promotions that are occurring in Washington State.  I might branch out to other states as well if I find something interesting. I am planning on disclosing the exact details of the promotion, like what you need to do to qualify. I will also state what type of person might be interested in these programs. Another thing that I will disclose is the amount of additional income that you will earn by signing up for this program. This way you can see how much extra you are really earning for all that extra work!

If you don’t keep a close eye on your checking accounts, you could be in for some major overdraft charges. Financial institutions typically tack on a hefty fee for drawing your account negative.

There are typically two different types of overdraft options. Knowing the difference between the two can be very important to your financial well being.

The first type of overdraft “solution” is typically an overdraft transfer. What happens is that if you were to overdraw your checking account below zero, the financial institution would take funds from another specified account to cover the difference. Typically a small fee between $2 - $5 is charged. This is the best option, and I would recommend that everyone sign up for it no matter how good your account balancing skills are. The reason for this is that if you don’t have this set up you will get an NSF fee which is typically over $20.

The second type of overdraft protection acts like a line of credit. This product will allow you to overdraw your checking account up to a certain amount for a given fee. If you don’t have the funds the transaction will still go through, but it typically costs over $20 per occurrance. If you are getting low on funds and you know you are going to overdraw your checking while waiting for payday you have a few options (one much better than the other). Option one is that you can continue to weild your debit card and get charged the $20+ fee for each transaction. This will add up a lot quicker than you think. Your $4 coffee is now $24 or more.

Instead, you should take option B. If you know you are going to have to dip into the reserves, you should go into your bank and withdraw everything up to your limit in cash. This will give you the funds that you desparately need, but the best part is that you will only be charged the overwithdrawal fee once. Use cash for all of your purchases, and when you get the money bring your account back up to zero.

With interest rates near all time lows, one overwithdrawal will wipe out all of your interest earnings for the entire year. Even if interest rates were much higher, why pay more in bank fees than you really have to?