How Important Is It To Have A High-Interest Checking Account?
This should spark your interest: Unlike an ordinary checking account, a high-yield account, also known as rewards checking, could allow you to earn a decent amount of interest, and maybe even a bonus. But first you’ll need to qualify for those monetary perks.
Why High-Yield Is Highly Appealing
During and after the Great Recession, the financial outlook in the country wasn’t so great. In response, the Federal Reserve lowered interest rates to the lowest levels ever. Although rates have slowly been rising to more normal levels, the interest on savings hasn’t shown much improvement.
Taking Into Account Your Qualifications
Opening a high-interest account requires meeting certain specifications, which may differ from bank to bank. Qualifying requirements can include:
- Maintaining a large balance
- Using a debit card to make a certain number of purchases each month
- Signing up for automatic bill pay
- Opting for electronic vs. paper statements
- Signing up for direct deposit
Failure to meet all of the requirements for your specific high-yield checking account could result in loss of the high-interest rate.
Determining If A High-Interest Account Is Right For You
Before signing up for a high-interest account, check to see if the bank charges a monthly fee if you don’t maintain the minimum balance. Consider whether any applicable high fees could essentially wipe out the account interest you might accrue.
Review your monthly debit transactions to see if you meet the required minimum. You don’t want to put yourself in a position where you feel pressured to overspend and make unnecessary purchases just to meet a transaction quota.
It’s also important to read the fine print regarding how long your high interest is expected to last. If the proposed interest rate will be in place only for a very short time, you may decide it’s not worth opening a new account or transferring money from an existing account.
High-interest accounts have their benefits, but you’ll want to make sure that the requirements work for your budget, your lifestyle, and your goals. After all, a high-interest account shouldn’t be something that brings about high anxiety.