A high-yielding checking account is a checking account that offers a higher interest rate on the funds deposited into the account. This contrasts traditional checking accounts that often have low or no interest rates. While these accounts may come with specific requirements or restrictions, they can be a good option for individuals looking to earn extra money on their cash balances.
There are a few different types of high-yielding checking accounts, each with unique features and benefits. Here is an overview of some of the most common types:
High-yield savings account
One type of high-yield savings account is an online account. These accounts are offered by digital banks that operate entirely online, without any physical branches. Because they don’t have the overhead costs associated with traditional brick-and-mortar banks, they can often offer higher interest rates on their accounts. Online high-yield checking accounts are convenient and easy to use, as they can be accessed from any device with an internet connection. They also usually come with a debit card and may offer other features, such as mobile check deposits. SoFi suggests “high-yield checking and savings accounts can help you make meaningful progress towards your financial goals.”
Rewards Checking Accounts
Another type of high-yielding checking account is a reward checking account. These accounts offer a higher interest rate in exchange for meeting certain requirements, such as making a certain number of debit card transactions or enrolling in e-statements. Rewards checking accounts are a good option for individuals who meet the requirements, as they can earn a higher rate of return on their money. However, it’s important to know that if you meet the requirements, the interest rate may be significantly higher or non-existent.
Credit Union Checking Accounts
Credit unions are another option for high-yielding checking accounts. Credit unions are nonprofit financial institutions that are owned and controlled by their members rather than shareholders. They often offer higher interest rates on their accounts because their main goal is to benefit their members rather than generate profits. For example, credit union checking accounts may have requirements for membership, such as living in a certain area or working for a specific employer.
High Yield Savings Account vs. High Yield Checking Account
It’s important to note that a high-yield checking account differs from a high-yield account. A high-yield account is a type of savings account that offers a higher interest rate on the funds deposited into the account. These accounts may have certain requirements or restrictions, but they are generally more flexible than high-yield checking accounts. For example, a high-yield savings account may not have a minimum balance requirement or a required number of debit card transactions.
High-yielding checking accounts can be a good option for individuals looking to earn a higher return on their cash balances. However, it’s important to carefully consider the requirements and restrictions of these accounts and choose one that meets your financial needs. For example, if you cannot meet the requirements of a high-yield checking account or prefer more flexibility, a high-yield account may be a better option. Regardless of which type of account you choose, it’s always a good idea to compare rates and fees from multiple institutions to find the best fit for you.
