How to Compare Bank Account Interest

While most of the time a consumer wants to shop for the lowest interest rates, when it comes to bank accounts, a higher rate is better. There are both checking accounts and savings account that pay interest.

Identification

Bank account interest rates are also known as APY or annual percentage yield. This is the wording that you want to look for when scanning the bank's media for an advertised interest rate.

Types

Both checking accounts and savings accounts may offer interest. Savings accounts will usually earn a higher APY than a checking account, but a checking account offers easier access to your money through checks and debit cards. While they may both require a minimum balance to open the account, you are more likely to find a checking account without this requirement than a savings account without it.

Considerations

You should consider required minimum balances and monthly fees when choosing a savings or checking account that offers interest. If most of your annual interest earnings will be offset by a year of high monthly fees because you did not keep enough money in the account, then you may be better off with an account that has a lower APY but no monthly fee.

References

• Bankrate: Interest Accounts Require High Minimums
• Bankrate: High-Yield Checking Perks Have Strings