High-Yield Checking Accounts: Make Dollars with Some Sense

Raise your hand if you have a checking account.  Most of us do.  Do you have an account that earns interest?  If you do, chances are it is pretty low, earning you a handful of pennies in a year—if you are lucky.  But, this is only the case with traditional checking accounts.  The reason for such low rates is that in the banking world, liquidity is directly related to interest rate.  That is, the more you are willing to leave your money alone, the more interest you can earn.  So that means you can’t earn much on your checking since you are always withdrawing, right?

Wrong.  There are checking accounts that can earn you more interest.  High-interest checking accounts (also called high-yield checking accounts) can do just that.  The idea is the name.  Even in a few days, your funds can earn a fair amount of interest.  This type of account scratches the back of the consumer and the banks alike.  The bank, who earns on money invested, and even money invested for a few days can earn them some income.  We all have bills to pay, but usually these are only paid monthly.  So, why not earn some interest before that money leaves your account?

A knowledgeable customer can reap the maximum from these accounts with just a little bit of time reading the fine print.  Remember, nothing comes easy for free.  Many accounts carry restrictions.  For example, you may be asked to maintain a minimum balance on your account.  However, this is made easier by another regulation: direct deposit is a common condition for high-interest checking accounts.  Though this may sound like a nuisance, in reality it is extremely beneficial.  By keeping your minimum balance, you are guaranteed to make a good amount of interest on your account.

Shopping for a high-interest checking can take some time, but it is quite easy.  Since most of these accounts are offered by online banks, you can shop around in your recliner at home.  Track the varying interest rates and terms/conditions that each bank has.  The interest rate will most likely be the most interesting factor for you decision.  However, do not leap before you look into the restrictions.  You don’t want to put your money somewhere you may find later is not the best choice for you.  Take your time choosing the right account for you and watch your money grow.