But neither is a good solution for people who can't stomach the occasional sharp declines in both stocks and high-yield bonds, which are never the place to put cash you will need within five years.
Relief, from banks. A Bankrate.com survey of high-yield checking accounts has identified a group of institutions offering average yields of 2.05 percent, or more than 34 times the usual checking account's interest rate. These high-yield accounts also pay more than the average online savings account, with interest at 1.03 percent.
For example, the survey shows, Cross Keys Bank has a high-yield checking account with an annual percentage yield of 2.5 percent, and Consumers Credit Union has been offering an APY of 4.09 percent.
You can find other banks at http://www.tinyurl.com/highyieldcheckingbanks and credit unions at http://www.tinyurl.com/highyieldcreditunions. Though some of these institutions may be a long way from home, you can open accounts online or by telephone.
Still, keep in mind that these interest rates can be fleeting. Banks and credit unions change rates often based on market conditions, and lately, U.S. Treasury rates, which can set the pace for banks, have hit some of the lowest rates on record.
As investors worldwide grew panicky in late May about a financial crisis in Europe, they threw so much money into 10-year U.S. Treasury bonds as a safe haven that rates dropped to an incredible 1.63 percent. That's a shockingly low rate for a bond that ties up money for 10 years. You may long for the days before the financial crisis when Treasurys were paying 5 percent.
Stay on top of things. As you seek a high-yield checking account, don't be surprised if rates dip, either while you are looking or after you have opened an account. Just a year ago, high-yield checking accounts were paying 2.56 percent on average, and the previous year it was 3.10 percent, according to Bankrate.com analyst Greg McBride.
Institutions usually reserve the right to change rates from time to time and might not notify you.
Also, notice the restrictions on these accounts. The high yield often applies to a limited amount of money in an account. For example, Cross Keys Bank and Consumers Credit Union commit to high interest on deposits only up to $10,000. If you add more money, it could be subject to almost no interest — perhaps an even worse rate than the one you are getting now.
If you have a lot of money to deposit, you could put some in one institution with a high-yield account and some in another. Pay attention to the minimum you might have to leave in your account, too.
Besides rules on minimum and maximum deposits, there also may be rules on how often you must make deposits to get the high yields. That might mean having your paycheck or Social Security check sent directly to the bank on an ongoing basis. And you often have to make a certain number of purchases each month with a debit card because the institution earns fees when you use the card.
Bankrate.com says the typical number of required debit-card uses is 10. So these accounts won't work for people who rely on check purchases.
Be prepared for a shock if you aren't attentive to the rules. McBride notes that if you fail to meet them any month, the average institution drops your interest rate to 0.08 percent.
Gail MarksJarvis is a personal finance columnist. E-mail at gmarksjarvistribune.com.