Most people consider a savings account when considering how to set money aside for emergencies or as a buffer for regular spending. There is an alternative, particularly if you want frequent access to your money while it grows, even though savings accounts often provide higher interest rates than standard checking accounts. A high yield checking account is what you need in this situation.
There is no one-size-fits-all approach when it comes to high-yield checking accounts. For this reason, it’s a good idea to research and contrast accounts before committing.
What is a high-yield checking account?
High-yield checking accounts offer higher-than-average interest rates. These are a form of deposit account, in contrast to normal checking accounts, which earn very little to no interest. Certain checking accounts come with extra benefits, like cash back rewards for using your debit card. Interest rates on others could be tier-based.
When choosing a high-yield savings account, take these factors into consideration:
Fees
The exact amount you pay will depend on your bank; for example, costs for using ATMs outside of your network may differ depending on your bank’s monthly reimbursement policy. Alternatively, your bank might impose maintenance fees; however, a lot of banks will not charge these, provided you keep a minimum amount on file. Other costs to be aware of are overdraft or insufficient funds penalties, as well as any fees associated with making wire transactions.
Interest rate
Sure, you want to maximize your interest earnings but read the fine print to find out what requirements must be fulfilled in order to receive the best rate. For example, banks might reserve the best interest rates for customers who deposit a specific amount.
Access to ATMs
Debit cards and in-network ATMs are available from the majority of banks. Think about the extent of the bank’s ATM network and whether it levies any out-of-network fees if you frequently use ATMs.
Online and mobile banking access
While a large number of banks will provide a high yield checking account option, not all will have a mobile app. If that’s important to you, find out which ones offer online banking apps and what you can do with the app. As an example, while some mobile banking apps merely let you check your balance, others let you deposit checks remotely.
Minimum balance requirements
Some types of high-yield checking accounts have minimum balance requirements that must be met at all times, while other accounts have deposit requirements that must be met when opening the account.
High-yield checking account vs. high-yield savings account
Higher interest rates are available from high-yield checking and savings accounts than from their conventional counterparts. However, daily activities like bill payment and shopping are done through checking accounts.
Your money can increase in savings accounts, however, if you work toward financial objectives like saving for an emergency fund or a down payment on a home.
Final thoughts
After considering the overall benefits, it will be worthwhile to consider a high-yield checking account for your financial needs. If you decide to open a high yield checking account, open it in a bank that satisfies your financial requirements and assistance.
