In the “old” days, there used to be banks called savings and loans and that was pretty much what they did. By specializing in savings, they were able to pay a good interest rate. Making loans enabled them to bring in the money to make a profit as well as pay interest to their customers. Offering other services meant hiring more employees and possibly having a larger office. The tendency has been to expand services and the savings and loan bank became harder to find. Of course there was also the big savings and loan scandal which didn’t do it much good.
With the Internet today, new banks are springing up that are Internet driven and, while they have their offices all over the country (and in other countries), they are not banks you can walk into and take care of business. They are strictly Internet banks. Because they do not have offices with tellers to serve you, they are able to pay a higher interest on your accounts. Because they are strictly a savings and loan institution, they can focus on just a few products and keep their manpower down.
Some of these Internet savings and loan institutions are beginning to expand and are getting into the checking account business. They already offer various CDs at pretty competitive rates. Now they are trying to draw in checking account business by offering high interest rates for checking, with the rates going higher as the balance goes higher.
These businesses make their money the same way the old S & Ls did, primarily with home and car loans with the occasional small business loan or line of credit loan. If you want to maximize the return on your savings, these online S & Ls are a good way to go. The one I’m in allows me to link to my checking account so I can move money back and forth between my checking account bank and the online savings bank. There are no fees and no minimum balance.