I remember when financial institutions started offering interest on checking accounts. I was excited, but quickly became disappointed then all the interest I received was about $2 a year.
A new survey shows that some financial institutions are offering higher interest rates now, but consumers are required to meet certain requirements before they get the interest.
Twenty checking accounts offered by U.S. banks and credit unions yield 2 percent or more, according to Bankrate.com. With the average money fund yielding just .01 percent, these high-yield checking accounts can be a great alternative for qualifying savers. All 20 accounts are federally insured and, unlike a CD, are completely liquid.
To receive the best rates, consumers usually must do some or all of the following:
- Make at least 10 debit card transactions each month.
- Receive electronic statements.
- Utilize direct deposit.
- Pay bills online.
High-yield checking accounts usually have balance caps, with the most common $25,000. A 2 percent return on a $25,000 balance is $500 per year. Traditional checking accounts yield an average of .06 percent each year, which is $15 on a $25,000 balance.
Greg McBride, Bankrate.com’s chief financial analyst, advises savers to pay close attention to balance caps and other requirements.
“For a $25,000 balance, the most interest is actually generated by the account with the 16th-highest APY,” he said.
The 15 highest yielding accounts have balance caps of $15,000 or lower, and maintaining balances above the cap rarely pays off – the average payout is just .24 percent.
About half of the 56 high-yield checking accounts that Bankrate.com analyzed are available nationwide.
