What could be nicer, from a thrifty consumer's viewpoint, than a checking account that pays 5¼% interest on deposits? Not much—and in New England, savings banks are luring customers away from commercial institutions with just that pitch. So far, 50 savings banks in Massachusetts and nine in New Hampshire have begun to offer a new service that lets customers write checks on their regular savings deposits, all the while collecting interest on the unspent balance.

Forbidden in some states from providing checking services, savings banks have long tried to compensate by selling money orders. But sales of money orders were...

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