You expect security and liquidity when you deposit your money into a bank account. But in addition to safety and availability, you also want your bank account to work for you.
That’s where yield comes in.
Banks earn money from the interest they charge on loans, so it only makes sense that you should too, but yields on savings and checking accounts are traditionally small to non-existent.
All that has changed with mobile banking and increased online competition, leading to a new kind of bank account — the high-yield checking account.
What is a high-yield checking account?
High-yield checking accounts offer annual percentage yields (APY) well above the national average for savings accounts of 0.06 percent APY. Some offer even better rates than high-yield savings accounts. Even if you only earn around 1 percent, that’s more than 15 times the national average.
To gain access to these high-interest rates, you must satisfy a set of special requirements for your account. If you fail to meet all the requirements in a given statement cycle, you get little or no interest for that month.
In most cases, that means a minimum number of debit card transactions every month. The bank or credit union then passes on some of the income they earn on interchange fees to you in the form of interest.
The 5 best high-yield checking accounts
All the banks and credit unions on this list offer competitive APY in exchange for a minimum number of transactions. The number of required transactions varies, as does the amount of money in your account that’s eligible for the best rates.
Some accounts require a minimum balance (or donation, in the case of some credit unions). Some also charge occasional penalty fees. All accounts require signing up for electronic statements, and most stipulate that you enroll in online or mobile banking.
All the accounts on the list below are open to members nationwide, despite some credit unions carrying the name of specific cities or states, and insured by either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA).
These are the five best high-yield checking accounts:
- Best overall APY: La Capitol Federal Credit Union Choice Checking (4.25 percent APY)
- Best tiered-rate: Consumers Credit Union Free Rewards Checking (4.09 percent APY)
- Best no-fee: Evansville Teachers Federal Credit Union Vertical Checking (3.30 percent APY)
- Best no minimum balance: Lake Michigan Credit Union Max Checking (3.00 percent APY)
- Best for high balances: Presidential Bank Advantage Checking (2.25 percent APY)
1. La Capitol Federal Credit Union Choice Checking (4.25 percent APY)
At 4.25 percent APY, La Capitol’s Choice Checking account offers one of the best available rates, but only on balances up to $3,000.
To receive that rate, you have to make at least 15 non-ATM debit card transactions per month or have an average daily balance of at least $1,000. Balances up to $3,000 receive 4.25 percent percent APY; balances from $3,000 to $10,000 receive 2.00 percent APY; balances over $10,000 receive 0.10 percent APY. If you don’t make the required debit transactions, the APY for the entire balance in a statement period is 0.10 percent.
If your average daily balance dips below $1,000, you will be charged a low balance fee of $8, but the fee is waived if you make 15 debit card transactions in the month. There’s no account minimum.
Although La Capitol is a credit union based in Louisiana, people outside the state can become a member if they join the Louisiana Association for Personal Financial Achievement (ACHIEVE).
2. Consumers Credit Union Free Rewards Checking (4.09 percent APY)
The Consumers Credit Union Free Rewards Checking account offers 2.09 percent APY on balances up to $10,000 if you make 12 monthly debit card purchases. Balances above $10,000 earn 0.20 percent APY, and balances above $25,000 earn 0.10 percent APY. If you don’t meet activity requirements, the APY is 0.01 percent on all balances.
You also must make at least $500 of monthly electronic transactions (including direct deposits, mobile check deposits, or ACH bank transfers) and receive e-statements. You get even higher rates if you also use a Consumers Credit Union credit card: $500 in credit card purchases gets you 3.09 percent APY, and $1,000 gets you 4.09 percent (on balances up to $10,000).
To join, you must pay a one-time, non-refundable fee to the Consumers Cooperative Association and deposit and maintain a minimum of $5 in your Membership Share/Savings Account.
3. Evansville Teachers Federal Credit Union Vertical Checking (3.30 percent APY)
The ETFCU Vertical Checking account offers qualifying account holders 3.30 percent APY on balances up to $20,000, and 0 percent above $20,000.
To get this rate, you have to make 15 or more debit purchases, receive at least one direct deposit, and log into online or mobile banking at least once per month. You also need to sign up to receive electronic statements. You get 0 percent APY on all balances if you don’t meet the requirements.
The account is fee-free, and up to $15 in ATM fees are refunded when monthly qualifications are met. The minimum opening deposit is $25.
Evansville Teachers Federal Credit Union was founded in Indiana and merged with a credit union serving educational groups in Kentucky. Anyone who donates $5 to the Mater Dei Friends & Alumni Association and keeps at least $5 in a savings account can join.
4. Lake Michigan Credit Union Max Checking (3.00 percent APY)
The LMCU Max Checking account gives you 3.00 percent APY on balances up to $15,000 and 0 percent above $15,000.
Monthly requirements include at least one direct deposit, ten debit or credit card purchases, and four logins to online banking. You must also opt for eStatements. If you fail to meet these requirements, your APY drops to 0.
There is no minimum account balance and no monthly fees. You can also be reimbursed for up to $10 in fees incurred at out-of-network ATMs.
Membership is free for residents of Michigan’s lower peninsula and Florida. Anyone else can join by donating $5 to the ALS Foundation and maintaining $5 or more in a member savings account.
5. Presidential Bank Advantage Checking (2.25 percent APY)
The Presidential Bank Advantage Checking account offers some of the highest checking interest at 2.25 percent APY up to $25,000 and 0.65 percent APY on balances beyond $25,000.
Requirements include electronic statements, plus seven or more electronic withdrawals per month, whether it be by ATM, debit card, ACH, or bill pay. You also have to receive at least $500 of monthly direct deposits. Your APY drops to 0.30 percent on all balances if you don’t meet these requirements.
There’s a $500 minimum deposit to open a new account and no fees if you meet the minimum balance. You can also get refunds for ATM fees up to $8 per month.
How to choose a high-yield checking account
As you can see, different high-yield checking accounts offer different advantages, so you shouldn’t make your choice based on the highest APY alone.
The following factors are equally important to consider:
It doesn’t matter how good your rates are if you have difficulty accessing your account.
Consider the features you use most often. Are you an avid online banker? Or do you prefer to take out cash from an ATM?
Depending on your preferences, you might opt for an account with a well-designed mobile app or online banking interface or one with more ATM access in your area.
Some accounts require a minimum number of debit card transactions, while others require direct deposits or a minimum balance.
If you’re not sure you’ll be able to meet the requirements, it’s probably best to look elsewhere. Otherwise, you might end up earning less than a typical deposit account.
Be aware of monthly service fees or minimum balance requirements. Even when these are absent, there may be overdraft, non-sufficient funds, or ATM fees. All these can add up quickly.
Always make sure the account you’re considering is insured by either the FDIC or NCUA if the financial institution defaults.
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