Hybrid savings accounts are banking instruments that allow clientele to combine banking services and benefits into one account. All U.S. Savings accounts are subject to the Federal Reserve’s Regulation D which outlines the rules and requirements by which banks must operate savings accounts.
To illustrate hybrid savings accounts further, to qualify as a savings account, one requirement is that no more than six transfers or withdrawals may be made by internet banking transactions. In so far as savings accounts conform to banking regulations, several types of hybrid savings accounts exist that have differing banking features, services and choices. The following is a review of some types of hybrid savings accounts.
• Frost momentum account
The Frost Momentum account is a hybrid account offered by Frost National Bank. This account has a variable interest rate linked to debit card spending i.e. the more a debit card is used, the higher savings interest can go. The account also offers charting and budgeting tools to help meet spending goals while simultaneously building savings.
• Negotiable order of withdrawal (NOW) accounts
Negotiable order of withdrawal or NOW accounts are a type of savings account that also allow checks or drafts to written against them. However, according to Regulation D, NOW accounts are not exclusive to savings accounts but also pertain to pension funds and escrow accounts.
• Money market accounts
According to Money Economics, money market accounts are hybrid savings accounts because they too combine savings account regulatory compliance with higher yielding accounts that also allow checks to be written against them. In order to qualify for higher interests rates however, money market accounts may also require a high minimum balance. Many varieties and types of money market accounts exist on the market.
• Hybrid Savings/CD
Another type of hybrid savings account combines Certificate of Deposit savings with checking privileges. The First Mariner Bank offers one such product that links allows checking withdrawals via transfers from another account at the bank. In essence this account allows one to earn a high rate of savings while also writing checks against the higher yield so long as a minimum balance is maintained. According to the First Mariner Bank, this hybrid savings/CD account is also insured by the Federal Deposit Insurance Corporation (FDIC)
• Hybrid yield savings
Some savings accounts offer balance linked interest rate yields that offer a higher rate of return on balances up to a certain amount and then a lower rate on balances above that. The Boeing Employees Credit Union (BECU) in Washington State offers one such account. The hybrid BECU member advantage savings account currently offers a yield of 6.17 percent for the first $500 and a .5 percent yield for amounts above that.
Sources: (Date of record, November 3, 2010)
1. http://bit.ly/9EjN92 (GPO Access: Regulation D)
2. http://bit.ly/bbpWUq (Frost Momentum)
3. http://bit.ly/d5TTNx (1st Mariner Bank)
4. http://bit.ly/adAxxN (Moneyeconomics.com)
5. http://bit.ly/cElIo4 (Boeing Employees Credit Union)