PEOPLE would often consider the banks as a depository institution, limited to the function of being a place where we can keep our money safe. Seldom do we find people who'd consider investing their money in banks because of its small interest rates.

Banks, regardless of whether it is a commercial bank or a thrift institution, usually offers 3.5 percent for a five year tie-up arrangement or two percent per annum at the most.

Because of the banking system's long deposit agreement period, most would rather take their money to the stock market where they stand to get fairly more than what banks could offer for a period that isn't really that long.

360 degree swing

But then, when recession hit the United States and the rest of the world, stock markets around the world suffered a slump. People see recession as something that gives them no guarantee or safety of their money while in the stock market.

Instead, they would opt to have their money taken into the bank not just for safety but to earn fairly a little more than having it at the stocks. It seemed that prospects of earning higher rates could be most likely better in a bank.

Finding other options

Despite the global financial meltdown, there are however still other institutions where your money could earn at a decently higher rate. These are community banks, credit unions and cooperatives. These institutions don't offer unbelievably high yields, yet seemed realistic enough, comparatively higher interest rates than commercial banks and safe too (for as long as you know how much would be the most that you could invest without hurting your cash flow to much).

What they offer

Community banks and credit unions offer an earning pegged at five percent based on a balance of $ 25,000. For one, Union State Bank of Atchinson (USBA) in Kansas pays 5.01 percent interest rate for a $ 25,000 checking account balance. Opening an account in the USA only requires $ 25.

Credit unions on the other hand are offering comparatively higher interest rates for cash deposits than the banks, while imposing lower interest rates on loans and credit cards.

But wait. It is imperative that we know the restrictions imposed by most (if not all) community banks and credit unions. Among those are online arrangements in receiving monthly statements and payment of bills. It is also a requirement to set up automatic payment and the use of a debit card in purchasing. Debit cards are to be used at least 10 to 15 times a month.

Failure to comply with the restrictions would gradually diminish the interest rate of your cash investment/ deposit in these community banks or credit unions. Interest rate of one's cash investment/ deposit is reduced by 0.3% percent per month for failure to meet the account requirements.

On the brighter side, interest rates are reverted back to the higher rate the following month provided that requirements are met.

There are also other schemes where you could earn even more. However, there is always the risk accompanying higher yields.

Under a financial pyramid scheme, an investment could earn five percent at the least. In fact, in other countries (like the Philippines) pyramiding groups offer as much as 20 percent interest rate for a shorter period of time, although the scheme has already been outlawed there.

As to where you would want to put your money, there is always a choice. You may take a high yield investment scheme on a higher risk basis or think of your investment's safety and guarantee for a minimal return. GP