Are you tired of earning minimal interest on your checking account? Look no further than high-yield checking accounts. These accounts offer higher interest rates than traditional checking accounts, allowing you to earn more on your money.
10 Best High-Yield Checking Accounts
1. Upgrade Rewards Checking Plus
Upgrade offers the Rewards Checking Plus account as a standout option in its digital banking suite. This account provides a unique blend of efficiency and savings with a competitive edge: customers can earn up to 2% cash back on everyday debit card purchases.
2. SoFi: Checking and Savings
The SoFi Checking and Savings account offers a high APY of up to 4.50% on savings and 0.50% APY on checking. It also offers a $300 sign-up bonus when you set up direct deposit of $5,000 or more, or a $50 bonus with direct deposit of $1,000 to $4,999.
3. First Tech Federal Credit Union
First Tech Rewards Checking offers a rewarding banking experience free from common restrictions, featuring high-yield interest and various financial incentives on a single platform.
4. Consumers Credit Union: Rewards Checking
Consumers Credit Union offers a great opportunity for those looking for a high-yield checking account. With an APY of 3% on balances up to $10,000, you can earn 80 times the national average rate.
5. Liberty Federal Credit Union: Vertical Checking
Liberty Federal Credit Union Vertical Checking offers a compelling choice for those seeking high yields from a checking account.
6. T-Mobile MONEY
T-Mobile MONEY is a great option for those looking for a checking account with a high APY. All customers earn 2.50% APY on all checking and savings balances, with no account fees.
7. Ally Bank: Interest Checking
Ally Bank offers an interest checking account with a competitive APY of 0.25%. With this account, you get access to your paycheck up to two days earlier with early direct deposit, and allows you to deposit checks remotely.
8. NBKC: Everything Account
The NBKC Everything Account offers a competitive APY of 1.50%, along with a range of convenient banking options.
9. Alliant Credit Union: High-Rate Checking
The Alliant Credit Union High-Rate Checking account offers a competitive APY of 0.25% and comes with a range of benefits to make banking easy and convenient.
10. Lake Michigan Credit Union: Max Checking
Lake Michigan Credit Union offers a competitive APY of 3.00% on its Max Checking account. The maximum balance earning the top APY is 3.00% up to $15,000, with no interest paid on balance amounts above that.
What is a high-yield checking account?
A high-yield checking account is a type of checking account that offers a higher interest rate than a traditional checking account. These interest bearing checking accounts typically offer annual percentage yields that range from 0.25% to 3% APY or more. In comparison, traditional checking accounts often have an APY of 0.01% or less.
Benefits of High-Yield Checking Accounts
One of the main benefits of high-yield checking accounts is the ability to earn interest on your money. This can add up to significant savings over time, especially for those with larger balances.
Additionally, many high interest checking accounts come with various perks such as free online bill pay, ATM fee reimbursements, and even cashback rewards. It’s important to note that the interest rate is not the only factor to consider when choosing a high interest checking account.
How to Choose a High-Yield Checking Account
A high-yield checking account can serve as a lucrative way to grow your savings. However, with multiple options in the market, it’s essential to select an account that aligns with your financial needs. Here are a few key factors you should consider:
- Interest rate: This is the primary attraction of a high-yield account. Always compare the interest rate to other offers available. Keep an eye on the annual percentage yield (APY) as it takes into account the compounding effect and offers a true reflection of your earnings. Be cautious, though, as promotional rates may expire after a certain period, and rates may not be guaranteed.
- Fees and charges: Many high-yield accounts offset their generous annual percentage yield with fees. Be wary of monthly maintenance fees, ATM charges, and transaction fees. Some accounts may also have a minimum balance requirement, where falling below can lead to penalties. To truly benefit from the high interest, prioritize accounts with minimal or no fees.
- Bank or credit union’s reputation: Trustworthiness is crucial. Research the bank or credit union’s customer service reviews, history, and any recent controversies. Positive feedback from current account holders can be an indicator of good service.
- Financial stability: In uncertain economic times, it’s vital to choose a financially stable institution. A bank or credit union’s financial health can provide peace of mind, knowing that they can withstand economic downturns.
- Insurance: Ensure that your chosen institution is FDIC-insured (for banks) or NCUA-insured (for credit unions). This insurance protects and reimburses your deposits up to a certain limit, should the institution fail.
- Account features: Modern accounts come with features like mobile banking, bill pay, free checks, and ATM reimbursements. Depending on your needs, these can be significant deciding factors.
- Accessibility: Consider how easy it is to access your funds. Is there a wide network of ATMs? Does the institution offer a mobile app? Is customer service readily available?
- Rewards and bonuses: Some accounts offer cash bonuses for new sign-ups or loyalty rewards. While they shouldn’t be the main deciding factor, they can be a nice perk.
- Overdraft policies: Understand the institution’s policy on overdrafts. Some banks offer overdraft protection services, while others may charge hefty fees.
- Adjoining products: Some banks offer better rates or benefits if you use other products, like credit cards or savings accounts, together with your checking account. This can be an added incentive if you’re looking for multiple financial products.
Alternatives to High-Yield Checking Accounts
While a high-yield checking account is an attractive option for many, it may not be suitable for everyone’s financial needs or preferences. Here are some common alternatives:
- High-yield savings accounts: Similar to high-yield checking, these savings accounts offer higher-than-average APYs. They may come with some restrictions regarding the number of withdrawals you can make each month.
- Money market accounts (MMAs): A money market account often blends the features of a checking and savings account. They can offer competitive rates and come with check-writing and debit card privileges, though they might have transaction limits.
- Certificates of deposit (CDs): CDs are time-deposit accounts where you agree to leave a sum of money untouched for a specified period (like 6 months, 1 year, or more) in exchange for a fixed interest rate. They typically offer higher rates than a standard savings account but impose penalties for early withdrawal.
Conclusion
High-yield checking accounts offer a great way to earn more interest on your money, with many of them coming with added perks. Be sure to compare interest rates, fees, and the reputation of the bank or credit union when choosing a high-yield checking account. By making an informed decision, you can ensure that your hard-earned money is working for you.
Frequently Asked Questions
How does a high-yield checking account work?
A high-yield checking account operates similarly to a traditional checking account. To earn the highest rates, you may have to meet certain criteria.
These criteria may include balance thresholds, mandatory monthly direct deposits, or a specified number of debit card transactions per month. However, not all high interest checking accounts have such requirements.
How does a high-yield checking account differ from a high-yield savings account?
While both types of accounts earn interest, high-yield checking accounts typically offer more flexibility with unlimited transactions, whereas savings accounts might limit the number of withdrawals or transfers you can make each month. However, savings accounts typically offer a higher annual percentage yield (APY).
Do high-yield checking accounts have fees?
Some do. It’s essential to review the terms and conditions of the account to understand any monthly maintenance fees, minimum balance requirements, or other associated charges.
Are high-yield checking accounts worth it?
The opportunity to earn extra interest can certainly be appealing, but you also need to consider any account fees or requirements that could offset it. Many online banks that offer high interest accounts have minimal or no fees, making them well worth considering.
Overall, it’s essential to thoroughly evaluate your individual financial needs and goals before making a decision on whether a high-yield checking account is the right choice for you.
Can the interest rate on my high-yield checking account change?
Yes. Interest rates on these accounts can be variable and may change based on market conditions or the bank’s discretion. Always read the terms and conditions to understand the rate’s stability.
Are there any transaction requirements to earn the high interest?
Some banks require a certain number of debit card transactions each month or direct deposit setups to qualify for the higher interest rate. Always check the account details to ensure you can meet these requirements.
Are interest bearing checking accounts FDIC insured?
Yes, interest bearing checking accounts at banks and credit unions are typically FDIC-insured (Federal Deposit Insurance Corporation) or NCUA-insured (National Credit Union Administration) just like traditional checking accounts. This means that your deposits are insured up to $250,000 per depositor, per institution.
