In recent years, the interest earned on money held in a typical checking account has dipped down near 0%, and when account fees are added in, customers are essentially paying banks for holding their cash. But this doesn’t necessarily need to be the case.
After surveying 56 high-yield checking accounts offered by banks across the U.S., Bankrate found that the average yield was 1.65%, a big step up from the paltry 0.11% yield offered by the average money market account these days.
“The reason consumers look to high-yield checking accounts are the yields they pay. Even in this low rate environment, consumers can generate hundreds of dollars in interest earnings per year with these accounts,” said Bankrate.com Chief Financial Analyst, Greg McBride.
Before you decide to drop your current account and switch to a higher-earning one, consider a few of the requirements for high-yield checking accounts. Many require a minimum number of debit card transactions allowed per month, usually 10. Many also require electronic receipt of checking statements and a direct deposit set up to go into the account. High-yield checking accounts tend to have balance caps of between $500 and $25,000, for an average maximum balance of $16,336. Finally, many such accounts are offered at smaller regional banks and credit unions, and require account holders to live in a certain area in order to be eligible.
If meeting these requirements isn’t a problem for you, switching to a high-yield account may be worth your while. A return of 2% on the average balance would earn an extra $327 per year.
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For a list of banks with the highest-yield checking accounts on offer, click here.