How to EARN almost 10% Interest on $1500 in a Checking Account!!

I bet you're saying NO WAY and that this must be a joke or a scam? But I assure, IT'S NOT!

Allow me to explain...

It probably doesn't take someone who is financially savvy to know that Savings Accounts with the major retail banks do not pay much interest. For example, the interest rate on Chase's regular Savings Account is 0.03% - which is only three hundredths of a percent!

So what does that actually equate to?

If we held $1500 in this Savings account that yields 0.03% in interest, it works out to:

Time for some Math...

1500 X (0.03 / 100) =
1500 X 0.0003 =
0.45

Since 0.03% is the annual (yearly) interest rate, it means that after a year of keeping $1500 in the account you would earn 45 cents in interest! If the interest is paid monthly, it would be 0.45 / 12, which is about 4 cents per month, roughly speaking. 

Not much, right? Yeah, I know!

So if the banks barely pay any interest on a Savings account, how the heck can you earn 9.6% interest in a Checking account? Especially considering the fact that Checking accounts typically don't pay any interest at all! On the contrary, you usually pay a monthly fee just to use the checking account!

So here's the SECRET...it's actually a clever trick if you are a financial geek and/or number cruncher, LOL.

Still using Chase as the bank in our example, they have a Checking account with a monthly fee of $12 per month.

However, if you hold AT LEAST $1500 in your checking account everyday for the month, the account fee is waived!!

The bank knows that most people won't do this, but for those that do, here's where the amazing interest rate comes in...

DISCLAIMER: This only works if you treat the $1500 as SAVINGS and not money that you will use to pay your day to day bills and expenses, because if your balance drops below $1500 then your banking fee will NOT be waived.

So let's say that you did in fact have $1500 in a Savings account that was paying some ridiculously low interest rate which in effect is negligible. Money that you know you didn't have to touch. If so, then move it into your Checking account!

Pay your bills and do your day to day banking with additional funds in excess of the $1500 and each month you will save at least $12 in fees, money that you would have spent anyway, without even thinking about it, every single month!

So, in essence, your Checking account has become a hybrid of both a Savings account and Checking account. Yes, this strategy requires firm discipline and the average Joe or Jane can't pull this off because you need to be diligent and prudent about managing your money. How easy is it to treat the $1500 as though it's not there even though you see it everyday staring you in the face?

But if you can actually do it, you are essentially earning almost 10% in interest on your $1500!

Since you would have spent the $12 anyway just to use the account, you are $12 richer for holding the $1500 in the account. So, in essence, you "earned" $12 in interest on $1500 in one month.

Again, we'll use some good ole Math to illustrate the Rate of Return or Interest Rate:

(12 X 12 ) / 1500 =
144 / 1500 =
0.096

We convert a Decimal to a Percent by Multiplying it by 100. So 0.096 works out to 9.6%!!

Isn't that awesome?? Or is it just me that cares about this kind of stuff??

For those of you who are super financially savvy, you might already know that there are some checking accounts that come with no fees which is even better! However, I would imagine that an overwhelming majority of people still have bank accounts where they pay monthly fees.

How about you? What do you think? Is this a cool trick or are you underwhelmed?