Internet banks have, on average, offered better rates than many brick-and-mortar banks because they are able to keep their overhead costs low. Generally, lower overhead costs means that they can offer customers a better rate of return on their money. Not only do many Internet banks offer higher APYs, many accounts also come without any monthly maintenance fees and some even offer additional free perks.

However, when you find an Internet bank offer that has a higher APY than your local bank, you should always check the fine print because that higher APY still could come with balance requirements, monthly account maintenance fees, and other stipulations that could end up eating all of the money you earn on that higher interest rate, and then some.

Take, for example, California First National Bank, otherwise known as CalFirst. Just based on the name of the bank, you would assume this entity has physical branch locations in California. The fact that this bank only has a virtual presence isn't a bad thing in itself, but minimum balance requirement and fees that come with this bank’s money market account would make you think that you're dealing with a brick-and-mortar bank with higher overhead costs. CalFirst’s Money Market account pays 1.08% APY, which isn't bad in this economy. However, interest does not compound on this account. According to the bank's Terms and Conditions page, interest is credited to your account monthly. If you close your account before interest is credited, you will not receive interest.

Additionally, you’re allowed only six withdrawals per month and each withdrawal after that will cost you $10 per withdrawal, and if your balance falls below $5,000 you'll be stuck with a $20 monthly maintenance fee ($5,000 is also the minimum amount required to open the account). This doesn't mean that you shouldn't open an account with CalFirst, it just means that you should always read the fine print and the terms and condition so that you fully know what you're getting into. Just because a bank is an Internet-only bank doesn't mean their accounts offer the best deal for your banking needs.

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Not all states are equal – at least when it comes to CD rates. Those are the findings from an analysis run by BestCashCow.com on its database of bank rates. The site analyzed its database of over 7,000 banks and 2,000,000 product rates to determine the best states to park your cash. Among the findings:

• Eight out of the top twelve states with the highest one year CD rate averages were from the central part of the United States.
• Five out of the top twelve states with the highest five year CD rate averages were from the central part of the United States.

When it comes to bank rates, the more expensive states weren’t even in the running. Financial powerhouse New York was thirty-sixth in rank for one year CDs and forty-second on the list for five year CDs while California was thirty-eight for one year CD averages and twenty-second for five year CD rates.

The rate discrepancy between the heartland the coasts may reflect several factors:

• The heartland states tend to have a higher percentage of small, community based banks that offer more competitive rates. For example, Oklahoma, the state with the most competitive 1 year CD rates has 15,828 people per small and medium-sized bank while New York 133,511 people per small and medium-sized bank.
• The heartland states are benefiting from a boom in the agricultural/commodity markets that has stimulated the economy and may have resulted in regionally higher rates. Eight of the top eleven states with the highest average rates are also in the top ten in terms of agriculture as a percentage of their economy. Soaring commodity prices may also be creating higher CD rates for consumers in those states.

It’s not just average rates that are higher. The highest rate in the country right now is 3.24% APY from West Plains Bank in Ainsworth, NE. As a comparison, the highest rate in New York State is 3.04% APY.

Below are the CD Rate Averages:

One Year CD Rate Averages

Five-year CD Averages

Banks are wiggling their way into consumer pockets in any way they can. Take money out of an ATM one gets charged (sometimes both by the releasing bank and one’s own bank.) Miss an average minimum balance or order a statement or cancel a check, one often has to pay. But, the most devastating fees are often the overdraft fees.

To maximize overdraft fees, banks have the keen rule to process the largest transaction first and work backwards. So, one may over draft numerous times with outstanding checks. Overdraft protection must be asked by the consumer and often requires maintenance of another account of additional fees so fewer consumers have it. The median overdraft fee is $27 while the average is $17. However, on Monday 4/5/2011 Citi Bank announced a reversal of the largest to smallest policy effective 7/25/2011.

To illustrate the difference in effect, suppose one has $1,250 in their account. Now suppose that consumer writes a rent check for $1,200, cable payment check of $75, cell phone check for $110 and electric utility check of $90. Granted that consumer should have been aware that they were beyond their means, but in this newer hand to mouth economy, these things happen.

With the above example, banks would usually do the following (if all checks were cashed on the same day):

Customary bank with old rule:

Beginning Balance: $1,250

Less: $1,200

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Subtotal 1: $50

Less: $110 (overdraft)

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Subtotal 2: -$60

Less: $90 (overdraft)

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Subtotal 3: -$150

Less: $75 (overdraft)

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Total: -$225

Note that there are three overdrafts, resulting in an average extra cost to the consumer of $51.

Using the same scenario, but with the smallest to largest transaction that Citi will begin implementing we see the situation much more manageable.

Beginning Balance: $1,250

Less: $75

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Subtotal 1: $1,125

Less: $90

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Subtotal 2: $1,035

Less: $110

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Subtotal 3: $925

Less: $1,200 (overdraft)

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Total: -$275

The consumer still has a negative balance of $225, but was only subjected to one overdraft – costing $17, not 3 costing $51.

The rationale of the banks is that the larger transactions are more important (i.e. mortgage payments, insurance payments, etc.) At this time Citi is a forerunner, with no one chasing them. Bank of America and Chase, at this time have no plans to change their protocol. This is a small victory, but is proving that elephants can learn how to dance.