High-yield checking accounts that offer more than 2% APY are becoming more common.
But many come with balance or deposit minimums, or require a customer use the bank’s bill-pay service or have paychecks deposited directly in order to get the APY.
High-yield checking accounts can be a great way to earn more interest on your spending money.
Just be sure to read the fine print and research carefully to ensure the account you want fits your lifestyle.
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Life is hard without a checking account. Without it, where would you deposit your paychecks? How would you pay your rent, your bills, your credit-card balances? Your checking account is the nexus of your entire financial life. The convenience makes them easy sells, so banks don’t feel the need to load them with any extra perks.
Till now. Interest rates for checking accounts have been abysmal for decades, but recently many banks are starting to offer high-yield checking account products — banking options that can net a substantial return to those who use them.
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What is a high-yield checking account?
A high-yield checking account is exactly what it sounds like: It’s a checking account that has an annual percentage yield (APY) that’s much higher than those offered by standard checking accounts, which usually offer no interest at all. That means the APY is at least 2%, but the best of the best offer 3% to 4%. Sometimes more.
(Note that a high-yield savings account is a different product. A high-yield savings account can pay 2% or more in interest, but is intended to be used to save money so it doesn’t come with a debit card, you can’t take the money out at ATMs, and you’re allowed only a minimum number of withdrawals each month.)
Being a special financial product, high-yield checking accounts can come with a lot of strings.
Some high-yield checking accounts may have requirements to qualify for the APY
Just because your high-yield checking account will provide somewhat of a return on your investment doesn’t mean you can treat it like a savings account.
The bank may require you to engage in some specific qualifying activities with your account, such as making a minimum number of debit-card or check transactions per month, having at least one recurring direct deposit, or making a minimum number of ATM withdrawals monthly. If you’re treating your high-yield checking account like a checking account, none of this should be a problem.
It’s standard to see deposit minimums when opening savings accounts, but with high-yield checking accounts, because of the greater operating costs for the institutions offering them, balance and deposit minimums are just as common. Not keeping the minimum balance in your high APY checking account could incur fees or lead to the loss of the high APY. Be sure to read the fine print from your bank before you open your account to …read more
Source:: Business Insider