The Federal Reserve, which totally failed to protect consumers from the abusive lending that led to the 2008 financial crisis, is apparently going to run the new consumer protection agency Congress is creating.

Reuters is reporting that Democrats from the U.S. House of Representatives have agreed to go along with a Senate proposal to make the agency part of the Fed, and abandoning their plan to make independent of the banking industry’s best friend.

The House’s retreat moves Wall Street reform a step closer to reality, but really. If you’re going to have a consumer protection agency, what’s the point of turning it over to Fed Chairman Ben Bernanke, a guy who’s shown virtually no concern for protecting consumers, even from the financial industry’s worst abuses.

Bank CEOs everywhere must be breaking out the bubbly.

READ THE FULL REUTERS STORY.

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Foreigners are still the biggest buyers of U.S. debt, scooping up $198 billion worth of Treasury-issued securities during the first quarter of the year.

But Fortune magazine says U.S. households poured $147 billion into Treasury bonds and bills between January and March of 2010.

That left Americans holding $796 billion worth of federal debt — the most since 1999. It also pushed U.S. households past Japan, to become the second biggest holder of Treasury debt.

Although China still holds more — $895 billion worth — these trends indicate “too much has been made of China’s role in financing U.S. spending,” Fortune says. “After all, there has been no shortage of domestic demand for bonds lately.”

READ THE ENTIRE STORY.

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Here’s where to find the best nationally available rates for the most popular certificates of deposit:

3-month CD: 1.00% APY from Hudson City Savings Bank and Earthstar Bank.

Hudson City requires a $5,000 minimum deposit from online applicants, but only $500 for in-person applications at any of its New York, New Jersey or Connecticut branches. Earthstar, with branches in the Philadelphia area, requires a $500 minimum deposit.

6-month CD: 1.25% APY from Aurora Bank and First City Bank.

Aurora Bank, based in Wilmington, Del. with a branch in Jersey City, N.J., requires a $1,000 minimum deposit, as does First City Bank, which has five branches in Fort Walton Beach, Fla.
Click here to read more

Bank of America Corp. and other banks are preparing new fees on basic banking services as they try to replace revenue lost to regulatory rules, according to the Wall Street Journal.

Those changes are expected to spell an end to free checking accounts for many Americans.

Free checking accounts, which have been widely available for more than a decade, have been a boon to middle-class consumers and attracted low-income customers to the banking system for the first time.

Customers will likely be required to pay new monthly maintenance fees on the most basic accounts that don’t generate a lot of activity.

To avoid a fee, customers will have to maintain certain account balances or frequently use other banking services, such as credit and debit cards, automated teller machines and online accounts.

CLICK HERE TO READ THE ENTIRE STORY.

CLICK HERE TO RETURN TO THE MAIN BLOG.

Here’s where to find the best nationally available rates for the most popular certificates of deposit:

3-month CD: 1.00% APY from Hudson City Savings Bank and Earthstar Bank.

Hudson City requires a $5,000 minimum deposit from online applicants, but only $500 for in-person applications at any of its New York, New Jersey or Connecticut branches. Earthstar, with branches in the Philadelphia area, requires a $500 minimum deposit.

6-month CD: 1.25% APY from Aurora Bank and First City Bank.

Aurora Bank, based in Wilmington, Del. with a branch in Jersey City, N.J., requires a $1,000 minimum deposit, as does First City Bank, which has five branches in Fort Walton Beach, Fla.
Click here to read more

You need to consider whether the career you’re studying for pays enough to warrant all of the money you’re borrowing for a college education.

Check out this PayScale College Salary Report on how much the typical grad can expect to make.

If, for example, you take out $100,000 in loans at 6.8% interest and plan to pay that off over 10 years, your student loan payment will be $1,150 a month, or $13,800 a year.

You can probably afford that if you’re on your way to becoming an aerospace engineer, one of the most lucrative jobs in the study, with an average starting salary of $60,000 a year and mid-career income of $100,000.

But that’s not the case if you’re going to be a social worker or elementary school teacher, where the average starting pay is $33,000 a year and the mid-career salary is $42,000.

This student loan calculator shows how much you must earn to keep up with post-college payments.

Trust me. You don’t want to graduate with student loans you’ll spend the rest of your life trying to repay.

Too many kids I know got hooked into that “no price is too high for your college dream” bull****.

A recent column in the New York Times detailed the problems of Cortney Munna, who graduated from NYU in 2005 and has no idea how she’ll repay her $100,000 in student loans.

In “an eerie echo of the mortgage crisis, tens of thousands of people like Ms. Munna are facing a reckoning,” Ron Lieber wrote. “They and their families made borrowing decisions based more on emotion than reason.”

If you’re already burdened with college debt, take a look at our post on how Lily’s List can help.

Comerica Bank is promoting an eye-catching bonus of up to $300 to new customers who open a checking account by June 30.

But banking at Comerica doesn’t make sense for everyone, and earning even part of that bonus requires some patience and effort.

Customers can qualify for up to three, $75 bonuses by:

• Making a regular direct deposit into the account.
• Using your debit card an average of five times a month between July 1 and Dec. 31.
• Paying an average of at least five bills a month with its online bill payment system during those six months.

Opening a top-of-the-line Premiere or Platinum Circle checking account is good for another $75, bringing the total to the full $300.

But customers must keep a significant amount of money at Comerica ($20,000 to $50,000) to avoid monthly fees on those accounts, and they’re definitely not the best choice for most of us.

There’s another hurdle, too.

Just opening a checking account doesn’t automatically enroll you in the bonus program. Once you have an account, you must go online to sign up, and you must do that prior to June 30.

Whatever you ultimately earn will be deposited in your account by Feb. 5, 2011 — and reported to the IRS as income.

Although this offer is available nationwide, a Comerica checking account only makes sense if you live near one of its branches in California, Texas, Arizona, Florida or Michigan.

That’s because Comerica doesn’t offer free use of other banks’ ATM machines — a must for long-distance customers.

It just kills me to have to write another post like this, but CD rates declined for the 19th straight month in May.

The average return on all five certificates of deposit we track finished the month lower than they were at the end of April.

Oh, and four of those five average CD rates will enter June at record lows.

I’d hoped the long decline in earnings power that began with the financial crisis in late 2008 and continued through the recession of 2009 might be slowing last month.

Unfortunately, the new data provide no indication that savings rates are finally bottoming out.

David Einhorn, president of the Greenlight Capital hedge fund, trashed the Federal Reserve policy that’s behind this decline in Thursday’s New York Times.

“The Fed wants to have low interest rates to fight unemployment…in a new version of the trickle-down theory,” Einhorn wrote. “The Fed hopes that by denying savers and adequate return on in risk-free assets like savings deposits, it will force them to speculate in stocks and other ‘risky assets.’

“This speculation drives stock prices higher, which creates a ‘wealth effect’ when the lucky speculators spend some of their gains on goods and services. The purchases increase aggregate demand and lead to job creation.”

As a result, Bankrate’s weekly survey of large banks and thrifts taken May 26, found the average annual yield for a:

3-month CD has fallen to 0.28%, down from 0.31% last month and 0.36% at the start of the year. That’s the lowest average since the survey began tracking 3-month CD rates in March 1989.

6-month CD has fallen to 0.42%, down from 0.43% last month and 0.50% at the start of the year. It’s the lowest average since the survey began tracking 6-month CD rates in January 1984.

1-year CD has fallen to 0.70%, down from 0.71% last month and 0.82% at the start of the year. It’s the lowest average since the survey began tracking 12-month CD rates in October 1983.

2-year CD has fallen to 1.12%, down from 1.15% last month and 1.24% at the start of the year and is the lowest average since the survey began tracking 24-month CD rates in March 1989.

5-year CD declined to 2.08%, down from 2.14% last month and 2.10% at the start of the year. That leaves the 5-year rate just slightly higher than the 2.06% reached in January, which remains the lowest average rate since the survey began tracking 60-month CDs in January 1984.

With average returns this low, you’ve got to take advantage of any better-than-average CD rates you can find in our database.

The financial crisis in Europe has had the unexpected effect of pushing mortgage rates in the United States to record lows.

The average cost of a 30-year fixed-rate mortgage fell to 4.96%, and the average rate for a 15-year, fixed-rate loan dropped to 4.34% in Bankrate’s most recent survey of major lenders.

Those are the cheapest they’ve ever been since the survey began in 1985.

As a result, you can find lenders such as AimLoan.com offering 30-year fixed-rate mortgages for as little as 4.625%, and 15-year loans for 4.00%, with no points.

Home loans were expected to become more costly this spring after the Federal Reserve ended its campaign to flood the mortgage market with money.

But worries that several European nations might default on their loans have created a new financial crisis and sent investors fleeing for the safety of Treasury bills or other debt guaranteed by the U.S. government.

That includes mortgages, since 96% of all new home loans are now backed in some way by an agency of the federal government.

The surge in demand has actually pushed interest rates down since the Fed bought the last of the $1.25 trillion worth of home loans it now holds in late March.

Principal and interest payments would be just $514 a month for each $100,000 borrowed with AimLoan’s 30-year mortgage, and $740 a month with its 15-year mortgage.

With rates that low, you may be able to afford the payments needed to pay off your home in half the time.

Use this mortgage comparison calculator to see how much interest you could save by paying your home off more quickly.

The online lender based in San Diego, Calif., is licensed to write mortgages in 45 states (the exceptions are New York, New Jersey, Nevada, Kansas, or Pennsylvania).

 To qualify you’ll need a credit score of 700 or higher. You must also be applying for a conforming loan — one for less than $417,000 to $729,500, depending on where you live.

A Bankaholic reader says her Citibank credit card recently offered to let her pay 1.99% APR on balance transfers through August 2011.

Sounded like a pretty good deal.

But something in the fine print made her hesitate: “Payments are allocated to pay off lower APR balances before higher balances.”

Wait a minute, she thought.

Doesn’t the Credit Card Accountability, Responsibility and Disclosure Act require payments in excess of the minimum payment to be applied to higher APR balances first?

Indeed it does.

This offer seems to be asking customers to waive that right if they transfer a balance to their Citibank card, and it wouldn’t be the first time we’ve seen it try to avoid the new rules.

By applying payments to the low-cost portion of the customer’s debt until its paid off, the bank could continue to collect interest on the high-cost debt for as long as possible.

I asked an expert at the National Consumer Law Center if credit cards can include specific terms in their agreements that essentially nullify one of the Credit CARD Act’s key rules.

Unfortunately, attorney Chi Chi Wu said they can.

While the preamble of the Credit CARD act discourages asking customers to waive their rights under the law, there’s nothing that makes it illegal.

She suggested I ask Citibank exactly how it intends to credit payments under these terms.

So I did. But after initially agreeing to find out, the bank’s public relations staff stopped returning my phone calls and emails.

The language Citibank uses in its balance transfer offers is very different from those we’ve seen from other big credit card issuers such as Bank of America and Capital One.

They clearly state that anything in excess of the minimum payment will go toward balances with the highest interest rate — just as the new law intends.

Bottom line: I would ignore all of the balance transfer offers Citi is promoting until it explains how payments will be credited.

And Citibank, you’ve got my number.

The No Hassle Miles credit card from Capital One has long been one of our favorite travel reward cards.

Now there’s a more rewarding, albeit more costly, alternative.

The new Venture VISA card is Capital One’s entre into the growing “upscale” market.

It offers pretty much the same rewards as the No Hassle Miles card, allowing users to redeem miles for hotels, rental cars and airline tickets on any carrier, with no blackout dates.

To figure out how many miles you need, just add two zeros to the price. If, for example, your ticket costs $150, you’ll be charged 15,000 miles. If your hotel costs $99, you’d need 9,900 miles.

The big difference is that the Venture card allows users to earn miles more quickly by providing 2 miles for every dollar spent, instead of the 1.25 miles per dollar with the No Hassle Miles card.

New cardholders can earn an extra 10,000 miles if they charge $1,000 worth of purchases during the first three months they have the card.

The drawback is the $59 annual fee — something most No Hassle Miles don’t have.

In dollars and cents, you must charge $2,950 a year to cover the annual fee and then another $1,844 to make up for all the miles that spending would have generated with the No Hassle card.

That means the break-even point is $4,794. If you charge more than that each year, you’re better off with the Venture card. If you charge less than that, stick with the No Hassle Miles card.

In our view, the Venture card should appeal to users with expense accounts and savvy consumers who charge virtually all of their personal expenses, from groceries to medical bills, to generate the most possible miles.

One final reason we like Capital One cards: If you travel abroad, you won’t be charged foreign transaction fees for items bought with foreign currency. Many cards ding you for 3% of the purchase price in U.S. dollars.

Want another opinion? Check out Bargaineering’s picks for the best credit cards.

A couple of weeks ago we suggested that traditional CD rates are so low, this might be a good time to take a chance on an indexed CD.

The return on indexed or market-linked certificates of deposit isn’t fixed as it is with traditional CDs.

It’s tied to a stock market index like the S&P 500, although it can also be dependent on everything from commodity prices to Treasury bill rates.

If the index goes up, you make money.

If goes down, you earn nothing.

So we’ve been looking for a couple of examples, to give you a sense of what banks are currently offering.

Everbank is selling a MarketSafe Diversified Metals CD that’s pegged to the price of gold, silver and platinum.

It’s a 5-year CD with a minimum deposit of $1,500. There are no fees and a 100% participation rate.

While your principal is FDIC insured, the total return is capped at no more than 50% of that principal.

This offer expires Thursday and you can get more info by calling (800) 926-4922.

Harris Bank is selling an S&P 500 Index Linked CD that tracks the performance of the popular stock index.

It’s also a 5-year CD with a $15,000 minimum deposit. There are no fees and a 100% participation rate.

Your principal is FDIC insured, but the total return is capped at no more than 35% of your principal.

This CD must be purchased by May 25. You can get more info by calling (888) 360-6394.

If you can deal with all of the rules, you’ll have a tough time finding a better return than Wilshire State Bank is offering on its Rainbow Savings Plan.

This installment savings plan requires you to choose a goal of $1,000, $5,000, $10,000 or $20,000 and decide how much time you want to reach that goal, from 12 to 36 months.

You then deposit a fixed amount into the plan each month, and collect your goal after the final payment has been made. The amount you receive includes your deposits and the interest you’ve earned on that savings.

The interest rate depends on the length of the plan — longer plans earn higher rates — and how the payments are made.

If the money is taken from a Wilshire State checking account, you’ll earn about a quarter-point more than if you have it automatically deducted from an account at another bank (although Wilshire will do so at no extra charge).

So how much are we talking about?

From 2.79% APY for a 12-month plan with the payments taken from another bank, to 3.82% APY for a 36-month plan with payments taken from a Wilshire account.

That’s a very competitive offer at a time that the best nationally available 12-month CD pays 1.80% APY and the top 36-month CD yields 2.60,% APY.

Here’s a chart from Wilshire State that details how much you’d earn, and how much the monthly payments would be, for plans with payments being taken from another bank:

Wilshire State has 23 branches in California, Texas, New Jersey and New York. But Rainbow plans can be opened online and are available to savers nationwide.

For those of you who’ve been asking, it has a solid 3 Stars from Bankrate’s “Safe & Sound” rating system.

We are back to where we were earlier this year, with the best savings accounts paying less than 2%.

Southern Community Bank and Trust continues to offer the top rate through its Readysaver.com Web site.

But it recently cut the return to 1.75% APY, with no minimum deposit to open an account.

That’s what the best savings accounts were paying in February, before Southern Community jumped to the top of our rankings by paying 2.00% APY.

(If you go to one of the bank’s 20 North Carolina branches, or its own Web site, you’ll find it’s only offering 0.15% APY on savings accounts.)

Franklin Synergy Bank has also lowered its rates to 1.60% APY — down from 1.65% last week and 1.70% APY two weeks ago.

That’s still good enough to hold onto second place, although you’ll need a hefty $25,000 minimum deposit to buy a certificate of deposit there.

The next best nationally available deals all pay 1.50% APY. They’re from:

Chesapeake Bank, which has 11 locations in eastern Virginia and requires a $1 minimum deposit.

newdominionDIRECT.com, an online bank based in Charlotte, N.C., that requires a $1,500 minimum deposit and a $1,000 average balance to avoid a $10 monthly service fee.

First Trade Union Bank, which has four branches in the Boston area, requires a $2,500 minimum deposit and a minimum daily balance of $250 to avoid a monthly $2.50 service charge.

Most money markets pay less than savings accounts, with one notable exception.

The Mega Money Market Account available from three, jointly-owned Oklahoma banks still pays 2.00% APY.

Compare these rates with the best savings rates from scores of other banks in our extensive database.

A recent comment asked why we don’t provide some indication of a bank’s financial health when we write about them.

The answer is simple: At one time we regularly included Bankrate’s “Safe & Sound” ratings in our posts. But we didn’t get much love from our readers.

In fact, they said that everyone knows that many of the banks offering the best rates are doing so because they’re in financial trouble and need money.

As long as the banks are FDIC insured — and they all are if they’re in our posts — readers made it clear they didn’t care about the ratings.

After all, when federal regulators seized and sold insolvent banks, the new owner would routinely honor the existing rates.

From a saver’s perspective, about the only thing that changed was the name on the door.

The situation is a little different now than it was a year or so ago.

Some buyers are no longer willing to pay the top rates they inherit from failed banks and impose new, lower rates on those accounts.

Of course the principal, and whatever interest customers have earned up to the seizure and sale, is guaranteed.

But if the new rates are low enough, it could force savers to reclaim their money and take it somewhere else.

“That is a hassle no one wants to deal with,” according to the comment.

But it seems like a pretty minor hassle that not many readers will ever face.

New FDIC rules that took effect Jan. 1 limit the savings rates troubled banks can offer.

As a result, fewer banks on the verge of failure are offering rates good enough to land on Bankaholic.

Only two of the banks currently offering top rates on 3-month to 5-year CDs — First City Bank and Earthstar Bank — have the lowest, one-star ratings from “Safe & Sound”.

We also checked to see how often we’ve touted rates from the 16 failed banks the FDIC seized last week.

We found only one — Broadway Bank of Chicago, which hasn’t been mentioned since June.

Considering all of this, we don’t think we’ll go back to the old policy of routinely providing financial ratings.

If you disagree, let us know.

You can always click here to check the “Safe & Sound” ratings for virtually any bank or credit union.

The Credit Card Accountability, Responsibility and Disclosure Act banned many of the industry’s most abusive fees and practices when it went into effect last winter.

But there’s a loophole in the new regulations that really bugs us.

In the past, credit cards routinely applied payments to that portion of your balance being charged the lowest interest rate.

If, for example, you took out a cash advance with a 29.99% interest rate but were charged only 8.99% interest on purchases, the credit card company would apply your payment to the balance with 8.99%.

That way, they could keep charging you 29.99% on as big a chunk of money as possible for as long as they could, making it harder for you to pay down your debt.

The Credit CARD Act was widely praised for reversing that and forcing credit cards to apply payments to the most expensive debt first.

But the new regulations don’t really go that far.

The rules have left many cardholders wondering how their payments are being credited, and provided no relief for those who need it most — customers who can only afford to make the minimum payment each month.

Here’s what the law says:

Upon receipt of a payment from a cardholder, the card issuer shall apply amounts in excess of the minimum payment amount first to the card balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted.

That means the portion of your minimum payment that goes toward reducing your debt can still be applied against the balance with the lowest interest rate.

Discover and Bank of America told us that that’s exactly what they’re doing. Chase (true to form) declined to comment. But you know it’s taking advantage of the loophole, too.

The only way to reduce your high-interest debt is to remit more than the minimum payment.

Using our previous example, let’s say your minimum payment is $300 a month, with $100 going to interest and the remaining $200 to reducing your debt.

Banks can still apply that $200 to the balance that charges 8.99% interest.

If that’s all you send in, this part of the Credit CARD Act hasn’t made it any easier for you to get out of debt.

If you write a check for $400, only the $100 “in excess of the minimum payment” would be used to pay down that portion of your debt charging 29.99%.

While that’s an improvement, most of your payment still went towards reducing your least costly debt.

We think Congress should have demanded that all payments be credited to the most costly portion of a cardholder’s balance.

But it’s hard to do the right thing when the credit cards, and all of their highly paid lobbyists, are fighting to do the wrong thing.

With interest rates on traditional CDs so low, why not take a chance on an indexed CD?

By taking a chance, we don’t mean taking a chance with your principal.

That’s still FDIC insured.

We mean take a chance on how much you might — or might not — earn.

The return on indexed or market-linked CDs isn’t fixed as it is with traditional CDs.

It’s tied to a stock market index like the S&P 500, although it can also be dependent on everything from commodity prices to Treasury bill rates.

If the index is higher on the maturity date than on the purchase date, you make money.

If it’s not, you earn nothing.

When traditional certificates of deposit are paying 3% or 4%, there’s little reason to take that risk.

But when they’re paying 2%, or 1%, or even less, you’ve got a lot less to lose, and lot more to gain, by taking a chance on indexed CDs

They’re typically offered by brokers and larger banks, but can be found at some community banks.

Most indexed CDs are offered in terms of 6 months to 5 years with minimum deposits ranging from $500 to $20,000.

How much you might earn depends on how well your index performs and two other factors — the participation rate and maximum rate of return.

The participation rate specifies the extent to which your return correlates to the appreciation of your index. They generally range from 75 to 100%.

If, for example, you buy a one-year CD with a participation rate of 75%, and the index your CD tracks rises 50%, you’re return would be an astronomical 37.5%.

The catch is that indexed CDs usually have a cap or maximum rate of return.

Those caps can range from 6% to 10% per year.

So, going back to our example, that one-year CD with a 75% participation rate and 50% increase in the tracking index, would probably limit your return to much less than 37.5%.

The main risk is that you won’t earn a dime if the index falls during the time you own your indexed CD.

And remember, it doesn’t matter how high the index might go during the time you own the CD. Everything depends on whether the index is up or down on the maturity date.

As long as you hold the CD until maturity, you’ll walk away with your entire principal.

Most banks and brokers routinely hold that principal in an FDIC-insured account (and you shouldn’t buy an indexed CD from anyone who doesn’t).

Fees are the only thing that can ding your principal.

Some sellers don’t charge a commission. Others charge as much as 5% of the initial deposit.

If, for example, you buy a $10,000 CD with a 3% commission, that $300 fee will be automatically be deducted from your principal, leaving you with an investment of $9,700.

In that case, even if you make nothing on the CD, and even though your principal is guaranteed, you could still wind up losing 3% of your savings.

In general, the higher the participation rate and maximum return, the bigger the commission will be.

We tend to favor indexed CDs with lower participation rates and maximum returns but no commission.

You’ll have to weigh the potential gains and losses of each deal and find the balance you’re comfortable with.

Much of the decision making that goes into buying an indexed CD can be summed up by the old Clint Eastwood line: “Do I feel lucky? Well do ya, punk?”

Many people feared that mortgages would become much more expensive when the Federal Reserve stopped buying mortgage-backed securities this spring.

But the Fed dropped out of the market March 31, and so far, mortgage rates remained near historic lows.

Our latest survey of the best rates available in 10 major cities found lenders offering 30-year, fixed-rate loans for less than 5% in all but one.

That’s unchanged from March, and nearly as good as last November, when average mortgage rates reached all-time lows and the best rate was below 5% in every city.

To find the best available rate in each market we search the databases at Bankrate.com and Interest.com.

We compare 30-year, fixed-rate loans with no points and fees of less than $2,000 because that’s the best mortgage for most borrowers.

The best deals we found were:

Atlanta: 4.875% from Absolute Mortgage Company.

Boston: 4.875% from Total Mortgage Services.

Chicago: 5.0% from Sterling Home Mortgage.

Dallas: 4.875% from Gold Star Inc. Mortgage Financial Group.

Los Angeles: 5.00% from AimLoan.com.

Miami: 4.75% from EZZ Financial.

New York: 4.875% from EverBank.

Phoenix: 4.875% from NationsChoice Mortgage.

San Francisco: 4.875% from The Money Store.

Seattle: 4.875% from Pacific finance Group, LLC.

The fine print: These mortgage rates are for conforming loans (less than $417,000), and for borrowers with credit scores of at least 700. For scores from 680 to 699, you’ll usually pay higher fees, up to 1% of the loan value, or a higher rate.

A growing number of banks are promoting “rising rate” CDs, which allow savers to boost their return if interest rates go up.

They’re playing to fears that anyone who locks in a long-term rate now will suffer when the Federal Reserve finally starts pushing interest rates back up.

Unfortunately, most of ones we’ve looked at aren’t very good deals.

The “Raise Your Rate CD” from Ally Bank is one of the few that seems worthwhile.

This 24-month certificate of deposit starts out paying 1.99% APY, which is reasonably close to the 2.25% APY you can earn with the best nationally available 2-year CD.

If Ally raises the rate on its 2-year CDs, you can call the bank and say, “Increase my rate.” Your CD will then earn the new rate until the certificate of deposit matures.

When do you make that call? After the rate goes up to 2.09% or maybe 2.15%?

If you raise your rate too early, you miss out on possible higher returns. If you raise it too late, you lose earlier increases.

But hey, you’re earning a very competitive rate right from the start and it can only get better.

Bank of America offers a similar opportunity to raise the interest rate on its 18-month “Opt-UP CD.”

The big difference is the initial interest rate — a paltry 1.25% APY.

That’s considerably less than the best 12-month CDs are paying right now, and interest rates are simply not going to increase enough to make Bank of America’s CD a better investment.

First Midwest Bank offers savers in Illinois, Indiana, Iowa and southern Wisconsin a 32-Month Rising Rate CD that takes the guesswork out of picking a higher rate.

It opens at 1.41% APY and automatically increases every eight months until it matures at 2.41% APY.

But why would you want to do that when you can earn 2.75% or 2.50% APY on a 36-month CD from any number of banks, collecting the full yield for the full term?

Bottom line: Be skeptical. Most rising rate CDs are a better marketing gimmick than savvy investment.

Just over a year ago banks flooded the market with high-yield or reward checking accounts.

Although the best ones paid 5% or more, we had to wonder whether these variable-rate accounts would quickly crater.

So we went back and checked how much the nationally available high-yield checking accounts that we wrote about last spring are paying today.

With one glaring exception, they’re doing pretty well. Their rates haven’t fallen as much as other types of deposit accounts, and they still offer better returns than the top-paying CDs.

(If you’re not familiar with how these accounts work, check out The ABCs of Rewards Checking.)

The bad boy of the bunch is Malvern Federal Savings Bank just outside Philadelphia.

In March 2009 it was paying 5.01% APY. Now it’s paying just 1.50% APY.

Compare that with the performance of the MAXimum Free account at Focus Bank, which has 12 branches in Arkansas and Missouri.

It was paying 4.51% APY last spring. It’s paying 4.51% APY this spring.

AmericaNet and two other jointly-owned online banks in Oklahoma, paid 5.25% APY on their reward checking accounts last year.

They’re still paying a respectable 4.00% APY.

Bank of the Sierra, with dozens of braches throughout central California, maintained the 4.51% APY it was paying until just a few months ago, when the rate was lowered to 4.09% APY.

Union State Bank, with four branches in Kansas, initially offered 5.01% APY, but has cut its rate to 3.25% APY.

Patriot Bank, with branches around Tampa, Fla., offered an initial rate of 4.01% APY. That’s down to 3.01% APY now.

All of those banks, except AmericNet and Bank of the Sierra, now limit new accounts to their state or local area.

Click here to find the nationally available reward checking accounts that are our current favorites.

Christmas Clubs aren’t known for their great rates. But we were still shocked to find a credit union in Chicago’s western suburbs that actually pays nothing at all.

Members who want to save for the holidays at NorthStar Credit Union earn 0% on balances below $1,000. (The return increases to 0.20% on balances above $1,000, which is more typical of what Christmas Clubs pay these days.)

So let’s say you contribute $100 a month beginning in January, and do so faithfully through October.

You’ll have the $1,000 you put into the account. And that’s it. Not a penny more.

This seemed such a shabby way to treat NorthStar’s members, we e-mailed CEO Lloyd Fredendall to ask why he was doing that.

His reply was frank — and depressing.

“As I am sure you are aware, the United States has been in an extended, essentially 0% interest rate environment for quite some time now,” Fredendall said.

Yeah, we’d heard about the Federal Reserve cutting the rate it expects banks to pay other banks for overnight deposits to a pittance almost 16 months ago.

“In addition, as I am also sure you are aware, loan demand at most institutions has been well below what was once considered normal in spite of record low rates on all loan types we offer.”

We’d heard about the recession, too.

As a result, Fredendall said, if NorthStar takes in more savings than the very limited amount it can lend, that money must be parked in overnight accounts that don’t pay enough interest to even cover the deposit insurance premiums.

“Clearly,” he concludes, “it would not be in best interest of our membership as a whole for us to hold deposits exceeding loan demand and reinvest them at a loss.”

And that, my friends, is the sorry plight of American savers.

JP Morgan Chase is pushing a new gimmick to sell mortgages.

Take out a new loan — purchase or refinance — and get back 1% of each year’s total mortgage payments.

But how much will you have to pay for a Chase loan?

When we used the “custom quote” feature on the bank’s Web site, we could find some fairly competitive rates on 30-year, fixed-rate loans.

Unfortunately, every quote also came with points — that’s prepaid interest due at closing, with one point equaling 1% of the loan amount.

Let’s look at one quote we were given for a $200,000 loan — 5.125% with 1.5 points.

The monthly payment would be $1,090, the annual payment would total $13,080, and the 1% cash back would be $130.80.

At that rate it would take just over 23 years to recoup the $3,000 in points the bank charged at closing. And almost no one keeps a mortgage 23 years.

The average loan is paid off in seven years, when the borrower either refinances or sells. In that case, homeowners would only recapture $917, or less than a third, of what they paid in points.

Bottom line: If you can find a lender offering the same rate without points, that’s a better deal than a “cash back” mortgage from Chase with points.

A lender offering a lower rate without points is an ever better way to go.

We had no problem finding lenders who did both in the databases at Bankrate.com and Interest.com.

One final concern.

To qualify for a “cash back” mortgage, you also have to have (or open) a Chase checking account.

That means you’ll be subjected to Chase’s high-pressure marketing campaign to sign up for over-draft protection and all of the fees that come with it.

How pitiful is this: A new Web site that helps college grads beg for money to repay student loans.

Borrowers start the process by signing up at Lilyslist.com and providing a copy of their loan statement.

Then parents, relatives or even anonymous donors can use credit or debit cards to make contributions that are sent directly to the lender.

Donations are in addition to, not a substitute for, the borrower’s regular monthly payment.

The site is the creation of four moms concerned with student debt. President Jennifer Taylor got the idea while having a frank discussion about student loans with her daughter, Lily, now a freshman at the University of Iowa.

“She was horrified” at how much her education was going to cost, Taylor says.

Unfortunately, this isn’t a free service. Lily’s List, Inc. is a for-profit company. Grads pay $15 a year to sign up, and every contribution carries a $2.75 fee.

But we think Lilyslist.com has a future because student loans have become such a burden for so many former students and their families.

The average student graduates college with over $23,000 in debt, and a lot of them are having a tough times finding the jobs they need to pay that money back and begin their adult lives.

We also like that the site verifies the loans are legit and ensures that contributions make it to the lender.

We’ve seen Web-based pleas for help paying down student loans, usually through a blog that’s collecting money through PayPal, for example.

But there’s no real way to check that the sob story’s true, or that the money isn’t be used to fund a nice trip to Tahiti.

If Lilyslist.com takes off, Taylor says companies will be allowed to put ads on the site in exchange for donations to its participants.

It also hopes to attract anonymous donors looking to help grads from their alma maters.

So if you sign up, make sure to put in your school and any fraternity or sorority affiliation, and fill out your “about me” section.

You never know what can catch a donor’s eye.

Southern Community Bank and Trust leads our rankings of the best nationally available savings accounts for the second straight month.

The bank, which has 20 branches in North Carolina, continues to pay 2.00% APY, with no minimum balance, through its Readysaver.com Web site.

That’s considerably better than the 0.15% APY Southern Community is offering on savings accounts through its own site or branches.

Franklin Synergy Bank has the second-best rate for the second-straight month.

The community bank in Franklin, Tenn., is paying 1.70% APY, but with a significant $25,000 minimum deposit to open an account. You must maintain a $500 balance to earn that rate.

After that are three banks, all new to our rankings, and all paying 1.50% APY:

Chesapeake Bank, which has 11 branches in eastern Virginia and requires only $1 to open its totally paperless Clear Sky account.

newdominionDIRECT.com, an online bank based in Charlotte, N.C., which requires a $1,500 minimum deposit and a $1,000 average balance to avoid a $10 monthly service fee.

First Trade Union Bank, which has four branches in the Boston area and requires a $2,500 minimum deposit as well as a $250 minimum daily balance to avoid a monthly service charge of $2.50 on its High and Mighty Account.

Most money markets currently pay less than savings accounts, with one notable exception: the Mega Money Market Account available from three, jointly-owned Oklahoma banks pays 2.00% APY.

Compare these rates with the best savings rates from scores of other banks in our extensive database.

Flushing Savings Bank in New York has caught our eye with oldest gimmick in the book — free gifts for opening an account.

To qualify, you must buy a certificate of deposit from its iGObanking online bank, through a special GiftsforBanking.com Web site.

The best choices are 24-month CD at 1.90% APY or a 60-month CD at 3.15% APY, which are close enough to the best nationally available rates to be worth considering.

You then get to select your gift based on the size and term of your deposit.

It’s the best giveaway we’ve seen since Irwin National Bank gave away HDTVs last summer.

For a 24-month CD and the minimum $5,000 deposit, you can choose a cordless phone system, George Foreman Jumbo indoor grill or 38 other items worth something less than $100.

Commit $10,000 and the 37 choices include stuff like a Nikon CoolPix digital camera that retails for close to $200.

Use that same $10,000 to buy a 60-month CD and you can get an Oreck XL Tower Air Purifier that goes for about $650.

For $50,000 you can choose a Superb by Broilmaster grill that retails for about $1,100.

With a $100,000 deposit some of the gifts you can get include a Bowflex Home Gym that retails for about $2,200, a Baume & Mercier woman’s Riviera watch, priced at $1,700, a Human Touch Robotic Massage chair that goes for $1,900, or a choice of three cruises.

You can preview all the gifts available at all levels.

Here’s the most generous way to think about this.

If you add the value of the gift to the interest you’d earn with the 24-month CD at the $5,000 level, the effective interest rate would be something like 3% — which is more than the best 2-year CDs are paying right now.

Just be aware that bailing early on these CDs will cost you six months worth of interest and the price of the gift.

Lenders are offering traditional fixed-rate mortgages for less than 5% in nine of the 10 major cities we surveyed this month.

That’s quite an improvement from July when only one of the 10 cities we looked at had those loans available for less than 5%.

It’s nearly as good as what we found in November, when average mortgage rates plunged to new record lows and loans were available for less than 5% in every single city we surveyed.

To find the best rates in each city we search the databases at Bankrate.com and Interest.com.

We compare 30-year, fixed-rate loans with no points and fees of less than $2,000 because that’s the best mortgage for most borrowers.

The best deals we found were:

Atlanta: 4.875% from AimLoan.com.

Boston: 4.875% from Gold Star Inc.

Chicago: 4.875% from Sterling Home Mortgage.

Dallas: 4.875% from Austin First Mortgage.

Los Angeles: 5.00% from Integrity First Financial Group.

Miami: 4.75% from Quick Quote Mortgage.

New York: 4.875% from EverBank.

Phoenix: 4.875% from Interstate Mortgage Service, Inc.

San Francisco: 4.875% from Mortgage Capital Associates.

Seattle: 4.875% from American Interbank.com.

The fine print: These mortgage rates are for conforming loans (less than $417,000), and for borrowers with credit scores of at least 700. For scores from 680 to 699, you’ll usually pay higher fees, up to 1% of the loan value, or a higher rate.

You may have heard that Sallie Mae’s getting into the banking business.

But will its new savings accounts and CDs catch on?

First, the yields aren’t that great — and already being cut.

When Sallie Mae introduced its savings accounts in early March, it was paying 1.35% APY. Now it’s paying 1.25% APY.

Although that’s still above an average return, it certainly won’t make it into our rankings of the best nationally available savings accounts, which are paying as much as 2.00% APY.

Second, everyone I know hates Sallie Mae.

As the largest broker of private student loans it’s burdened a generation of college students with more high-cost debt than they can ever hope to repay.

Sallie Mae started out as an arm of the federal government. But when it went private in 1997, it ratcheted up the marketing about how “the college dream” must be attained at any cost.

As college costs soared, a growing number of financially naïve students had to borrow from private lenders to make up the gap between tuition and what they could borrow through Pell Grants from the federal government.

Sallie Mae made sure it got a huge share of that business by more-or-less bribing employees in student aid offices at colleges and universities across the country with all sorts of perks, such as luxurious vacations.

Although it promised to end that scandalous behavior in a 2007 settlement with the New York attorney general, the damage was done.

Hundreds of thousands of students had taken out loans that cost more than they should have and gobbled up such a huge chunk of their income that it’s impossible to save for anything — or even move out of their parents’ basement.

That makes Sallie Mae’s new business more than a little ironic to all of those students and their families struggling to meet their monthly payments.

If the returns are ever good enough to crack Bankaholic’s rankings of the best savings accounts or CDs, they’ll be included.

But I’ll understand if you give us crap for it.

Although rates on our favorite home equity lines of credit have edged up since December, they’re still the cheapest consumer loans you can get.

If you have 30% to 40% equity in your home and good credit you should be able to find a HELOC for under 5% APR. In some areas of the country, you could pay 4% or less.

Of course that’s a very big if after two years of steadily, and in some parts of the country, spectacularly falling home prices.

Banks opened less than $60 billion worth of new home equity loans and lines of credit in 2009, down from $430 billion in 2006, primarily because homeowners have much less equity to borrow against.

But if you can qualify, here are our favorite deals:

Nationwide Bank offers rates as low as 4.50%, with no annual fee, in all 50 states.

Citizens Bank charges as little as 3.74% in Pennsylvania, New Jersey, Delaware and all of the New England states except Maine. If you live in New York you’ll pay 3.99%. The $50 annual fee is waived the first year.

Dollar Bank makes loans in Pennsylvania and Ohio starting at 3.74% with a $50 annual fee.

ViewPoint Bank offers rates as low as 4.5% for loans in Texas and Oklahoma, with no annual fee.

Nevada State Bank makes loans nationwide starting at 4.25% with a $50 annual fee that’s waived if you’ve tapped your credit line the previous year.

BB&T offers loans in 11 southeastern states and Washington, D.C. starting at 4.25% with no annual fee.

Hoyne Savings Bank charges as little as 3.50% for loans in the Chicago area with a $25 annual fee.

To qualify for one of these HELOCs you need:

• A credit score of at least 660, with the exception of Nationwide Bank, which requires a minimum score of 720.
• To retain 20% equity in your home after the line of credit is added on to the balance of your primary mortgage.

Click here to compare these with the best HELOC rates from other lenders in your area.

Here’s another long-term CD with such a small early withdrawal penalty it’s a better bet than the top-paying short-term CDs.

It’s Ally Bank’s 5-year certificate of deposit.

We got into this discussion last week, when we looked at whether the three best 5-year CDs could be gamed to out-earn the best 12- or 24-month CDs.

We found the one from Florida’s Bank United would indeed pay more if you cashed it in after just one or two years because it’s early withdrawal penalty is only three months worth of interest.

The other two would not because their early withdrawal penalties are too onerous.

That led Tracy, one of our readers, to suggest that Ally’s 5-year CD would be another good substitute for short-term CDs.

The online bank of GMAC Financial pays somewhat less than Bank United — 3.09% APY vs. 3.50% APY. (Since we wrote that post, Bank United has lowered the rate on its 5-year CDs to 3.25% APY.)

But Ally has the most lenient early withdrawal penalty we know of on long-term CDs — just two months worth of interest.

If you cashed in after one year, you’d still earn about 2.6% after paying the penalty — far more than the 1.90% APY the best 12-month CD is paying.

Redeem your certificate after two years and your return would increase to a little more than 3% — considerably higher than the 2.30% APY the best 24-month CD is paying.

It’s also very similar to what you’d earn with Bank United’s new, lower rate.

Think of your mailbox before the Great Recession. You got bills, grocery store circulars, invitations and magazines, but crowding them all out, we bet, were credit card offers.

Credit card issuers mailed five to seven billion offers a year from 2004 to 2007, according to Mintel Comperemedia, which tracks such things.

But when the economy tanked, default rates soared and billion-dollar losses caused banks to become much stingier with new cards.

After hearing that only 2 billion offers were mailed out last year, we wondered who was still on the mailing list.

We asked Gregory Meyer, community relations manager at Meriwest Credit Union in San Jose, Calif. He says the industry is looking for consumers with:

Above average credit scores. A high score shows you pay on time and haven’t maxed out your credit lines, making it less likely you’ll default.

“Generally, we are looking at the upper echelon in credit scores. These are people with strong credit scores greater than 720.”

A profitable history. “Card companies love the ‘Steady Eddies,’ those who pay down balances while also paying some interest. That’s their bread and butter.”

The ideal customer is “someone who might charge a $2,500 vacation to their card and pay it off at $200 a month,” allowing the issuer to earn about a year’s worth of interest on the debt.

Maturity. “It used to be that 18 year olds were the ones card companies would solicit at class registration days on college campuses, exchanging beach towels and beer coolers for applications.”

Not anymore. Default rates in the 18 to 25 age group scared them off. Plus, marketing cards is now banned on most college campuses, and anyone under 21 must now have a co-signer for their cards.

Lots of assets. Card issuers are focusing on the affluent, pouring through databases to identify potential customers with money to spend.

“They may ask for all customers in a given zip code who are over 55, have $100,000 in their IRA, own a home for at least seven years, their mortgage is current, and they have a checking account with a payroll direct deposit.”