Most people open a checking account so they can easily pay their bills, make withdrawals, or use a debit card. Many don’t realize that some checking accounts can also be used to earn money. While most bank account holders understand that they can earn interest by keeping their money in a savings account, many are unaware that there are interest-bearing checking accounts too.
Here are some reasons you many want to consider opening a high interest checking account:
While the return on a high interest checking account isn’t likely to be as large as the potential returns you could achieve with more risky investments like stocks, an interest-bearing checking account can help diversify your overall financial portfolio. Most people like having both a checking and savings account anyway, so why not choose one that can earn you some extra cash?
One of the major benefits an interest-bearing checking account has over a stock investment is that your interest rate is guaranteed. Furthermore, if the account is opened at an FDIC-insured bank, it’s protected - even if the bank fails. Generally, the FDIC insures up to $250,000 per accountholder, per financial institution. However, some banks offer protection beyond FDIC insurance limits. Accounts opened at Bank5 Connect for instance are protected by both FDIC insurance and the Depositors Insurance Fund (DIF), which insures all deposits in excess of FDIC limits.
When looking for an interest-bearing checking account it’s also important to understand how much money you’ll need to keep in it to earn interest. For example, some accounts may require a minimum balance of $10 to avoid a monthly fee, but a minimum balance of $100 or more to earn interest.
No or Low Monthly Fees
There are many banks out there that do not charge a fee for customers to open an interest-bearing checking account. Other banks will waive ongoing maintenance fees if you meet a monthly minimum balance requirement. Be sure to do your research before opening an account so you understand how much money you’ll need to keep in it. It’s also important to check whether the bank will require you to make a certain number of deposits or transactions per month, or if the account has any limitations that could lead to you being charged a fee.
More Flexible Than Other Investments
Certificates of deposit and money market accounts are popular ways for consumers to safely earn interest on their money, but these accounts typically have limitations regarding when or how often you can withdraw your money. It’s also common for them to have relatively high required balances. An interest-bearing checking account on the other hand usually has a lower minimum balance requirement than a CD or money market, and doesn’t typically restrict access to your funds. With a high interest checking account you can generally use your debit card, withdraw money from an ATM, or make external transfers whenever necessary – all while earning interest. An interest-bearing checking account takes away the fear of having your funds locked into a CD when you might need them. It’s also possible to place some funds into a CD with a higher interest rate, while keep a portion of your money in an interest-bearing checking account. No matter how you structure your various deposits, placing your money in an insured bank account with a guaranteed interest rate allows you to be confident that your money is working for you.
Convenient to Manage
The exact banking features available to you will depend on which financial institution you open an account with, but these days most banks offer access to online banking and mobile apps to help you manage your high interest checking account. Many banks also offer peer-to-peer payment options so you can easily pay other people directly from your account. Services like Zelle or Popmoney are commonly tied into online banking platforms so you can initiate and receive payments without having to download or log into third-party apps. Most banks offering interest-bearing checking accounts also offer direct deposit for checks and the ability to pay bills online through your account.
One of the biggest reasons people don’t have an interest-bearing checking account is because they simply don’t know the option is available. Although these types of accounts are not offered at all financial institutions, they’re worth looking for. If you find one that will work for you and has a competitive interest rate, there are not a lot of drawbacks. You can earn interest monthly while using your funds the way you are used to.
For more information on Bank5 Connect’s High-Interest Checking Account, contact us today.