What Is Interest-Earning Checking?

Some checking accounts pay interest.

Interest-earning checking accounts pay interest on your checking balance just like a savings or money market account. The key to making this type of account work for you lies in the fine print.

Expert Insight

As the Board of Governors of the Federal Reserve System note, interest-earning checking accounts are great if you avoid fees. Some accounts require a minimum balance. If you fall below that number, what you pay in fees could be greater than whatever interest you earn.

Ways to Avoid Fees

Some banks, including Wells Fargo, will waive monthly fees even if your balance falls below the minimum. You just need to meet another requirement, such as establishing direct deposit of your paycheck from your employer to your account.

Considerations

While you can access your money faster with a checking account, certificates of deposit and money market accounts tend to have higher interest rates, according to Kiplinger's Personal Finance Magazine.

Shop Around

Kiplinger's experts also suggest shopping around for the best interest rates. They note that credit unions tend to offer better deals than banks on interest-earning checking accounts.

Look Online

Online banks can offer higher interest rates on their accounts (checking and savings) since they usually have lower overhead costs than brick-and-mortar institutions.

References

• Kiplinger's Personal Finance Magazine: Interest-Earning Checking Accounts
• Board of Governors of the Federal Reserve System: Making Sense of Savings
• Wells Fargo Checking Information