Let's be honest, the interest rate on most interest-bearing checking accounts these days is a joke. The average rate is a measly 0.05 percent, according to the latest report from the FDIC.

Imagine if you could earn 3 or 4 percent interest on a "free" checking account – with no minimum balance requirement, no monthly fees and free transactions at any ATM in the country?

It sounds too good to be true, but it's not.

The Kasasa checking account (pronounced kah-sah-suh) offered by dozens of community banks and credit unions across the country is for real. Right now, 29 of these institutions are paying 3 to 4 percent APY to those who qualify.

The 4.01 APY offered by Pelican State Credit Union in Baton Rouge is 80 times more than the average interest-free checking account pays these days. Heck, it's more than four times what you can make with the average 5-year CD. (National average: 0.86 percent, Bankrate.com)

"Consumers have been wrongly led to believe that earning competitive rates on checking is not an option anymore," said Kasasa CEO Gabe Krajicek. "That's costing them hundreds of dollars each year."

For many people, the Kasasa account can be an easy way to boost the return on cash savings.

"It's a good way to put all or most of your emergency fund into an account that's going to earn a higher rate of return without sacrificing safety or liquidity," said Greg McBride, senior financial analyst at Bankrate.com.

The key is you have to clear certain hurdles every month to earn that higher interest rate: get an e-statement, log in to online banking and use your debit card 10 times.

"For most people it's not hard to satisfy the qualification criteria," Krajicek said. "This is the stuff you probably do anyway."

Should you fail to qualify for that month, say you only used your debit card nine times, you'll get paid a much lower rate that's comparable to a typical checking account.

"While the interest drops, there is never any sort of fee and you can try next month to meet all the qualifications," Krajicek explained.

Joe Ridout, who lives in San Francisco, is very happy with his Kasasa checking.

"It's a no-brainer," he said "It beats the pants off of any other bank account I have."

Ridout is the spokesperson for the advocacy group Consumer Action, so he knows a good deal when he finds it.

"If you are interested in saving money in a bank account, this is an easy way to do it," he told me. "You'll earn exponentially more than what you'd get from a mega-bank as long as you meet the monthly requirements."

How do they do it?

Kasasa is designed to attract the type of customers that community banks and credit unions want: people who lower their costs and generate revenue.

A financial institution saves around $2 a month when an e-statement replaces a paper one. They make money every time you use your debit card. People who use online banking are more self-serve and that helps reduce overhead costs.

And it turns out, someone who has Kasasa checking is also twice as likely to apply for a loan.

Even so, there's a limit to how much profit a bank can expect to make from these accounts. That's why there's a cap on the amount of money that can earn the maximum interest rate. It varies from $5,000 to $50,000 depending on the institution.

"We're not trying to make this a place to park a million dollars," Kasasa's Krajicek told me.

What he wants to do is get more people to invest their money with community banks and credit unions because they offer personal service and reinvest that money in the local community.

"There are so many community financial institutions that will treat you like a person and not a number," Krajicek said. "Consumers really do have a much better banking alternative than just sitting there and having it stuck to them by mega-banks."