Perhaps they think keeping savings-account interest rates straight is just too easy today.

In a move to differentiate its product from those of its rivals, Capital One (NYSE:COF) this morning introduced a hybrid rewards program for customers using the plastic-meister as their bank. Quoting directly from the press release: "The new 'Capital One Rewards Money Market' account has a competitive interest rate currently at 4.65 percent Annual Percentage Yield (APY), and customers earn one mile for every $20 of average balance per month, including interest." To sweeten the deal even further, Capital One will add "2,500 bonus miles [for customers] depositing $500 or more in the first month."

Crunching the numbers, here's what I get: One "point" at Capital One, if taken in cash rather than airline miles, is roughly equivalent to $0.01 in cash rebates. So say a customer puts $10,000 in a Capital One account, and keeps it there for one year -- what's that customer's "take" at the end of the year?

  • 10,000 / 20 = 500 points.
  • 500 points x $0.01 = $5 per month.
  • Multiply by 12 months, and the cash value of the points is $60.
  • Add to that 4.65% interest on the $10K, and you've got a total take of $525-- or an effective interest rate of 5.25%.

According to Mr. Murdoch's Daily Diary -- er, I mean, The Wall Street Journal -- Capital One isn't the first bank to pull this idea out of its wallet. Both Citigroup (NYSE:C) and National City (NYSE:NCC) also offer rewards programs tied to customers' savings accounts. And of course, the major credit card providers have been doing rewards programs for years. According to the Journal, such programs "are a way to develop 'stickiness' and make it harder for customers to switch to a rival bank." Which got me to thinking -- if the program works for Capital One, what might Fools be missing out on by going with the novel interest-plus-miles system, rather than another bank's plain-vanilla good interest rates?

Turning to Bankrate.com (NASDAQ:RATE) for the answer, and scanning the list generated for banks in the Fool's backyard of Alexandria, Va., we find only a handful of money-market products besting the combined yield on Capital One's new offering. Two to note are Countrywide (NYSE:CFC), which leads the pack with a 5.5% yield on its money market accounts (with $10K invested), and Amtrust Direct, which comes in second at 5.31%. Lagging just behind is Discover (NYSE:DFS) Bank at 5.2%. Moreover, if you tack on the $25 bonus for depositing $500, Capital One ties for first place in the first year an account is open.

Foolish yield-seekers may have just found themselves a new bank.

What else do we have in our wallet on Capital One? Find out in:

National City is a Motley Fool Income Investor recommendation, Bankrate is a Rule Breakers selection, and Discover is an Inside Value pick. You can try any of these newsletters for free for 30 days.  

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.