Interest rates are rising little by little, but if you meet certain requirements, you can get double the ~ two percent yield of big banks by switching to a high yield reward checking account.
Offered by smaller regional banks and credit unions to attract clients, high yield reward checking accounts offer rates as high as five percent. To qualify, you typically need to be under a certain balance threshold (say, $10,000 to $25,000, though it could be lower); sign up for direct deposit; and make a certain number of debit transactions each month. If you do, you’ll benefit from the higher interest and FDIC insurance.
That last part is what makes the account particularly attractive to some people. CDs and money markets can also offer relatively low rates, but high security; these checking accounts have the same security levels and a higher return. Deposit Accounts, which tracks interest rates, reports that rates are at a five-year high.
“Everyone that needs to have some type of an emergency reserve account could definitely consider these types of vehicles,” Diane Pearson, a wealth advisor and certified financial planner, told Bankrate.
Obviously, there are other things to take into account besides interest rated. You’ll want to check out ATM fees associated with any potential new account, as well as online bill pay options, account maintenance fees, etc. (The fees in particular could wipe away the interest you earn.) You might not be able to qualify for every credit union, though some do make it relatively easy, requiring a one-time donation to join. Just make sure you check their bank footprint, if accessing a physical branch is important to you, and that you understand the requirements for the interest rate. Check out the bank or credit union’s history of changing interest rates before you sign up, too (you’ll likely be able to find this with a Google search).
But if you have a bit of cash sitting around that you’d like to earn a bit of interest on, these accounts are good options.