A checking account is a type of bank account that allows you to deposit and withdraw money regularly. However, not all checking accounts are created equal. Some checking accounts, known as high-yield checking accounts, offer higher interest rates than others and have added features, making them a more attractive option for consumers. Below are seven key attributes of high yield checking account:
1. Higher interest rates than traditional accounts
One of the most attractive features of a high-yield checking account is its higher interest rate than traditional checking accounts. The interest rate on a high-yield account is typically tiered, meaning the rate increases as your balance increases. This can be advantageous if you have a large balance in your checking account that you don’t plan to use soon. Another advantage of a high-yield account is that the interest is usually compounded daily and credited to your account monthly. This means you earn interest not only on your principal balance but also on the interest earned in previous months.
2. They have no or low fees
Many high-yield checking accounts have little to no monthly maintenance fees. It’s important to note that some high-yield accounts may have other fees, such as overdrafts or ATM fees. Be sure to read the account disclosure documents carefully to understand any applicable fees.
3. Minimum balance requirements
Most high-yield checking accounts require a minimum balance to earn a higher interest rate. This balance requirement may be tiered, meaning that different interest rates apply to different balance levels. Be sure to understand the minimum balance requirement and any other requirements that may apply, such as maintaining a certain number of debit card transactions per month.
4. ATM fee reimbursement
Some high-yield checking accounts offer ATM fee reimbursement, meaning the bank will refund any fees charged by other banks’ ATMs when you withdraw cash. This can be a valuable feature if you frequently use ATMs outside of your bank’s network.
5. Debit card rewards
Many high-yield checking accounts offer rewards programs based on the dollar amount of your purchases, cashback, points on the number of transactions you make, or discounts on certain purchases. Nonetheless, it’s important to understand any applicable limitations or restrictions. For example, there may be a cap on the amount of rewards you can earn or certain types of purchases that are not eligible for rewards.
6. Online and mobile banking
Most high-yield checking accounts offer online banking services that allow you to manage your account from anywhere with an internet connection. Many also offer mobile banking apps that allow you to access your account from your smartphone or tablet. Look for an account with a user-friendly online and mobile banking interface.
7. Offer electronic bill pay services
Many high-yield checking accounts offer bill pay services that allow you to pay your bills electronically from your checking account. With bill pay, you can set up one-time or recurring payments for rent, utilities, and credit card payments. Look for an account that offers bill pay with no additional fees.
A high-yield checking account can be a great option for those who want to earn more interest on their money while still having the convenience of a checking account. However, comparing account features, fees, and requirements is important to find the best account for your needs. Additionally, carefully read the terms and conditions to understand applicable limitations or restrictions. By understanding the features and benefits of high-yield accounts, you can decide whether a high-yield checking account is right for you.
- Higher interest rates than traditional accounts
- They have no or low fees
- Minimum balance requirements
- ATM fee reimbursement
- Debit card rewards
- Online and mobile banking
- Offer electronic bill pay services