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An interest-bearing checking account is like a regular checking account but with a bonus – it earns you a small amount of money (interest) for keeping your money in the account. This means that as you leave your money in the account, it gradually grows a bit. Just remember, the interest rates are usually low compared to other savings options, so don't expect to get rich from it.
Also, many interest-bearing checking accounts have a minimum balance requirement to earn the advertised interest rate. If your balance falls below this threshold, you may earn little to no interest for that month.
Here are the best interest bearing checking account as of September 2024:
Connexus Xtraordinary Checking
APY
Minimum Deposit
Our Rating
Fees
The Connexus Credit Union Xtraordinary Checking account offers the highest APY for balances up to $25,000 and lower APY for amounts over $25,000. To earn this rate, you need to meet manageable monthly activity requirements.
Although no minimum deposit is required to open the account, a $5 deposit is needed to establish membership and open a checking account alongside a savings account.
Customers enjoy access to over 67,000 surcharge-free ATMs through Connexus, with up to $25 monthly refunds for out-of-network ATM fees when meeting activity criteria. The account includes a debit card, online bill pay, and offers overdraft protection when linked to a Connexus savings account.
Quontic High Yield Checking
APY
Minimum Deposit
Our Rating
Fees
With Quontic High Yield Checking, you can receive a 1.10% APY on your entire balance when you conduct a minimum of 10 eligible debit card purchases of $10 or higher per statement cycle. If you don't meet the requirements for qualifying transactions, your interest and APY will be 0.01%.
Here are the main characteristics of this account:
- No monthly charges.
- A minimum initial deposit of $100 is required.
- Enjoy a higher interest rate by making at least 10 debit card transactions each month.
- An inactivity fee of $5 applies if there are no transactions in one year.
- Cash deposits can only be made through an ATM.
Axos Rewards Checking
Fees
Our Rating
Promotion
APY Checking
Axos Rewards Checking
Fees
Our Rating
Promotion
APY Checking
The Axos Bank Rewards Checking is an interest bearing account with a tiered system to determine how much you’ll earn on your balance. You can earn interest on balances up to $50,000, but it usually difficult to achieve the highest rate due to the varied requirements.
The Axos Bank Rewards Checking account offers a range of convenient banking tools, such as online bill payment and a highly-rated mobile app for managing transactions.
They provide a switch kit to help you transfer your account to Axos seamlessly. While Axos Bank doesn't have its own ATM network, they offer unlimited fee reimbursement for domestic ATMs, making it easy to access your cash without extra charges. However, foreign ATM fees are not reimbursed.
Notably, there's no minimum balance requirement for earning interest, and the account is free of monthly maintenance, overdraft, and insufficient funds fees, making it an attractive option for online checking.
Consumers Credit Union Certificates
APY
Minimum Deposit
Promotion
Fees
Consumers Credit Union Certificates
APY
Minimum Deposit
Promotion
Fees
This account offers a tiered interest rate structure:
3.00% APY: You can earn this rate on balances up to $10,000 by fulfilling these conditions: enroll in eDocuments, make at least 12 monthly debit card purchases, and receive direct deposits, Mobile Check Deposits, or ACH Credits totaling $500 or more.
4.00% APY: If you spend $500 or more monthly on your CCU Visa Credit Card (In addition to 3.00% APY requirements).
5.00% APY: Spend $1,000 or more on your CCU Visa Credit Card each month (In addition to 3.00% APY requirements). .
These rates are applicable to balances up to $10,000. One standout feature is the unlimited reimbursement for ATM fees, allowing you to access your money without worrying about additional charges. With access to over 30,000 ATMs and 5,000 shared branches, you have convenient options for banking.
Their online and mobile banking services provide flexibility and ease in managing your finances. Plus, you may receive your direct deposits up to two days early, giving you quicker access to your funds.
The account allows you to write unlimited checks, offering versatility in managing your payments. Overall, Consumers Credit Union Rewards Checking provides convenient and cost-effective banking solutions for its members.
SoFi Checking Account
APY
Our Rating
Current Promotion
Fees
SoFi bank offers 0.50% APY on any balance.
SoFi's banking features include credit score monitoring through their partnership with TransUnion, providing updates on your VantageScore 3.0 credit score. There's no minimum balance requirement, allowing you to start with just $1 and add funds regularly. You can create up to 20 savings vaults within your SoFi account for different financial goals, and these funds are FDIC-insured.
Additionally, they offer automatic savings roundups, rounding up purchases to the nearest dollar and transferring the spare change to your chosen vault. They also provide unlimited free paper checks for payments not accepting online transactions, offering flexibility in managing bills, rent, or other expenses.
Ally Interest Checking Account
Fees
Minimum Deposit
Our Rating
APY Checking
Ally Interest Checking Account
Fees
Minimum Deposit
Our Rating
APY Checking
Ally Bank's Interest Checking account offers a range of benefits for customers seeking fee-free and convenient banking. There are no monthly maintenance or overdraft fees, providing a hassle-free banking experience.
You'll have access to a vast network of 43,000+ no-fee Allpoint® ATMs, with reimbursement of up to $10 per statement cycle for fees incurred at other ATMs across the nation. For better financial planning, Ally Bank offers spending buckets to help you stay ahead of expenses. Additionally, you can receive your payments up to 2 days earlier through early direct deposit.
To prevent accidental overspending, the account provides a double line of defense with the Overdraft Transfer Service and CoverDraft℠ service. Ally eCheck DepositSM enables you to conveniently deposit checks using your smartphone. Just snap a photo of the check, and you're done.
Furthermore, you can manage your debit card effectively within the mobile app by locking it, setting notifications, and limiting spending. Ally Bank's Interest Checking is designed for simplicity and accessibility, making it a suitable choice for many banking needs.
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Do Checking Accounts Pay Interest?
Checking accounts typically do not pay interest, or if they do, the interest rate is usually very low.
Checking accounts are designed for everyday spending and transactions, like paying bills and buying groceries. They provide easy access to your money through checks, debit cards, and online transfers.
To earn interest on a checking account, you will typically need to meet certain requirements, such as maintaining a minimum balance or making a certain number of debit card transactions each month. You may also need to have direct deposit set up.
Why Only Few Bank Offer Interest Checking Accounts?
Checking accounts have cost for banks, even if they do not pay interest. This is because banks have to pay for things like ATM networks, fraud protection, and customer service. As a result, banks may not be willing to offer interest-bearing checking accounts if they do not think they can make a profit on them.
Additionally, banks prefer their customers to invest their funds in other financial instruments that yield higher interest rates, such as savings accounts or certificates of deposit (CDs). When customers deposit their money, even in a savings account, it benefits banks because they can utilize a portion of these funds for lending purposes, allowing them to generate greater interest income.
How To Choose Interest Bearing Checking Account?
Choosing an interest-bearing checking account involves considering your financial needs and comparing various account options. Here are steps to help you choose the right one:
Understand Your Needs: Determine why you want an interest checking account. Is it for daily transactions, earning interest, or a combination of both? Your priorities will guide your choice.
Compare Interest Rates: Look for accounts with competitive interest rates. Compare APY offered by different banks. A higher APY means more interest earned.
Fees and Requirements: Check for monthly maintenance fees, minimum balance requirements, and transaction fees. Choose an account with fees that align with your usage and balance.
Access and Convenience: Ensure the account offers convenient access, including online banking, mobile apps, and ATM access. Consider the bank's branch and ATM network.
Account Features: Review additional features like overdraft protection, bill pay services, and customer support. Choose an account that suits your banking habits.
Bonuses and Promotions: Some banks offer sign-up bonuses or promotional interest rates. Check for any ongoing offers that can benefit you.
Customer Reviews: Research customer reviews and ratings for the bank and the specific account you're interested in. This can provide insights into customer satisfaction.
Remember that the best interest checking account for you depends on your unique financial situation and preferences.
Pros And Cons Of Interest Bearing Checking Account
Interest-bearing checking accounts come with their own set of advantages and disadvantages. Here are some of the key pros and cons:
Pros | Cons |
|---|---|
Earn Interest | Lower Interest Rates |
Liquidity | Fees and Requirements |
Daily Spending
| Complexity |
- Earn Interest
The primary benefit is the ability to earn interest on the money you keep in your checking account, which is typically not the case with regular checking accounts.
- Liquidity
Unlike some other interest-bearing accounts like CDs, you can access your money in an interest checking account without facing penalties or withdrawal restrictions.
- Daily Spending
Interest checking accounts allow you to use your account for everyday transactions, making it convenient for paying bills and making purchases.
- Lower Interest Rates
Interest rates on checking accounts are typically lower compared to other savings or investment options like savings accounts, CDs, or investments in stocks or bonds. You may earn more elsewhere.
- Fees and Requirements
Many interest checking accounts have different types of requirements to qualify for the advertised interest rate. Failing to meet these criteria can eat into your earnings.
- Complexity
Managing an interest checking account may be more complicated than a standard checking account, as you need to monitor interest rates, fees, and account requirements.
Alternatives To Interest Bearing Checking Account
If you're looking for alternatives to interest-bearing checking accounts, there are several options to consider, depending on your financial goals and needs:
Savings Accounts: These accounts typically offer higher interest rates compared to checking accounts. They are designed for saving money rather than everyday transactions. You can easily transfer funds between a savings account and a checking account for day-to-day expenses.
Certificates of Deposit (CDs): CDs are time-based deposits that offer higher interest rates than regular savings accounts or checking accounts. You agree to leave your money in the CD for a specific period, and in return, you receive a fixed interest rate.
Money Market Accounts (MMAs): MMAs are a hybrid between savings and checking accounts. They often offer higher interest rates than standard checking accounts, but they may have limitations like minimum balance requirements and transaction restrictions.
Money Market Funds: These are mutual funds that invest in short-term, low-risk securities like government bonds and commercial paper. They can offer higher yields than traditional savings or checking accounts.
Interest Bearing Checking Accounts: Ranking Methodology
The Smart Investor team conducted a thorough review to identify the best interest-bearing checking accounts. We assessed them based on four main categories, each with specific features:
Interest Rates and Terms (40%): We evaluated the interest rates offered on the checking accounts and any associated terms and conditions. Accounts with higher interest rates, favorable terms, and minimal fees received higher ratings in this category.
Account Features (30%): This category assessed the features and benefits offered by each interest-bearing checking account, including transfer options, the ability to set savings goals, account linking capabilities, mobile app usability, check deposit options, and other features important for checking accounts. Banks offering a comprehensive suite of features and user-friendly tools earned higher scores.
Customer Experience (20%): We closely examined the overall customer experience, including the ease of account opening, communication with customer service representatives, the usability of online banking platforms and mobile apps, and the responsiveness of customer support. Banks with user-friendly interfaces, efficient digital banking tools, and responsive customer service received higher ratings.
Bank Reputation (10%): Our team analyzed each bank's reputation based on factors such as customer satisfaction ratings, JD Power scores, TrustPilot reviews, and any notable awards or recognitions received. Banks with positive reputations and a history of providing excellent service to customers received higher ratings.
Within each category, we assigned weights to various features and qualities to ensure a comprehensive evaluation of each interest-bearing checking account.
Checking Accounts Reviews
Chase Total Checking
Citi Access Account
Discover Cashback Debit
American Express Rewards Checking
Wells Fargo Everyday Checking
SoFi Checking & Savings
Bank of America Advantage Banking
Capital One 360 Checking
Schwab Bank Investor Checking
Upgrade Savings And Checking
Wells Fargo Prime vs Premier Checking
U.S. Bank Smartly Checking
Chase Private Client
Axos Bank Rewards Checking
