What is a high-yield checking account?

A checking account is a useful tool for managing your everyday money, offering flexible access for frequent payments, withdrawing cash or covering emergencies. Because it’s designed for day-to-day spending, that flexibility is typically the only perk of a checking account.

But what if you could earn interest on your balance while enjoying the benefits of unlimited debit card and check-writing privileges? You can with a high-yield checking account. These accounts advertise high APYs — far more than the 0.08% national average you’ll find with a traditional interest-bearing checking account — in exchange for meeting minimum transactions, balances or other monthly requirements. And while they might require a bit more oversight than your typical checking account to ensure you’re eking out the highest earnings, the savings payoff could be worth the work.

Here’s what to know about these high-yield accounts and how to successfully incorporate one into your savings strategy.

What is a high-yield checking account?

A high-yield or high-interest checking account is a type of checking account that offers an annual percentage yield — or APY — on your balance. Unlike a traditional checking account, a high-yield checking account might require that you meet specific requirements to earn the highest advertised rate, including:

Maintaining a specific average daily balance

Making a minimum number of debit transactions monthly

Opting in to e-statements or enrolling in online banking

Setting up a minimum number of direct deposits monthly

Opening and linking to a savings or other account

These accounts are protected by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), if your account is with a credit union, with balances insured for up to $250,000 per person, per account.

Many of today’s best high-yield checking accounts won’t require maintenance or other fees, though some accounts cap how much you’re able to earn in a given month or year — which means you can’t earn more, even if you meet all other account requirements. Still others pay different APYs depending on your total account balance through tiered rates. So the higher your balance, the better your rate of return.

High-yield checking accounts issued by credit card companies might also earn membership rewards through debit cards attached to these accounts. For example, American Express Rewards Checking earns members interest and Amex Membership Rewards points on eligible debit card purchases.

And as with other high-yield accounts, the best rates are found with digital accounts and online banks that save on the overhead costs of managing brick-and-mortar branches, passing the savings to you in the form of high yields.

How do high-yield checking accounts work?

High-yield checking accounts work similarly to traditional checking accounts that don’t offer APYs: You deposit money into your checking account, and you can use the money for day-to-day transactions either with a debit card or by writing checks. Most accounts allow you to link a savings account for transferring money into your account as well as withdraw money with your debit card from an ATM. Still others reimburse ATM fees if you use your card out of network.

You can keep track of your account balance and transactions with itemized statements that detail where you’ve spent money and how much, among other details. These statements are available for review by logging in to an online account or app, with some accounts offering paper statements for a fee.

Carefully read the fine print of your account to understand any transaction, direct deposit, minimum balance or other requirements for earning the highest rate you’re eligible for.

How do banks make money on high-yield accounts?

Banks make money on checking accounts by charging merchants and retailers a fee each time you swipe your debit card to buy goods or services. Some high-yield checking accounts also require that you enroll in online banking or e-statements in order to earn the highest advertised APY, which further saves the bank costs associated with in-person transactions or printing statements.

The potential for higher yields — and the threat of lower APYs if you can’t meet earning requirements — all are designed to encourage you to store more money than you typically might in a traditional checking account. More generally, banks charge higher interest rates on money they lend out than the interest they pay on customer deposit accounts.

Benefits of a high-interest checking account

While the average interest-bearing checking account earns a low 0.08% APY, a high-yield checking account offers the same day-to-day access with perks that include:

High APYs on your everyday cash. You can earn 10 times more than with a traditional checking account, allowing you day-to-day money management with the perk of watching your balance grow.

No or low fees. Many high-yield checking accounts come with no minimum opening deposit, monthly maintenance or other fees as long as you meet stated requirements.

Potential for membership rewards. Some high-yield checking accounts come with a rewards debit card offering perks like points or cash back on qualified purchases.

Your balance is insured. High-yield checking accounts are insured by the FDIC or NCUA for up to $250,000 per person, per account.

Drawbacks of a high-interest checking account

Main drawbacks of high-yield checking accounts come down to ensuring you’re meeting all criteria needed to earn the highest variable APYs:

Interest-earning requirements. Unlike with a traditional checking account, you might need to keep track of transactions to make sure you’re meeting stated requirements — and earning the highest yield you’re eligible for.

Lower yields possible. If you miss a requirement or two in any given month, your account could fall back to a much lower APY of 1.00% or less.

Posts can be delayed. Debit transactions could take a few days to hit your account — which could be an issue if you haven’t comfortably met monthly transaction requirements.

Earnings may be capped. Some high-yield checking accounts limit how much you can earn by imposing balance thresholds — say, allowing you to earn the highest APY on up to $5,000, with any balance beyond that earning a significantly lower APY.

How to compare high-yield checking accounts

When comparing high-yield checking accounts, stick with those insured by the FDIC or NCUA that you can use without too much work, weighing elements that include:

Yield rates. Look for an APY that’s higher than the national average — even 1.00% is better than no interest, though the higher the rate, the more you can earn on your savings.

Earning requirements. Make sure that you can easily meet conditions to earn the highest APY, like monthly direct deposits, debit card transactions or online banking use.

Fees. Some high-yield checking accounts require a high monthly balance to avoid maintenance and other fees. Look for accounts with no or low fees, and understand how you can avoid them.

Penalty APYs. If you fall short of even one account requirement, you run the risk of a lower rate of return for that month — or no APY, with some accounts — which can eat into your earning potential. Know the actual fall-back rate for each account and any other penalties you might face for missing the mark.

Ease of money access. Focus on accounts that fit the way you like to bank. If that’s digital banking, consider those offering robust apps and mobile check deposits. If you prefer in-person banking, narrow your search to banks in your neighborhood.

Is a high-yield checking account worth it?

There’s a lot to like about high-interest checking accounts — the ability to earn a little on your balance, among them. And while you might need to keep a closer eye on these accounts than you would for a typical checking account, the high-APY payoff can be worth it.

Here’s what to watch for when managing a high-yield account — and tips for successfully maximizing your savings.

Earning requirements

Meeting the ideal conditions of your account could require keeping track of debit card transitions, monitoring transaction posting dates or setting up direct deposit. If you miss even one requirement, you run this risk of missing out on the highest yields.

💡Expert tip: Avoiding coming in under any monthly minimums by using your debit card and setting up autopay or payment reminders for utility, credit card and other bills.

Rate caps and balance maximums

Many high-yield checking accounts discourage high balances by limiting the highest advertised APY on up to $5,000 or $10,000 in your account, dropping your rate to a low — or no — APY on the rest.

💡Expert tip: Keep in your checking account only the balance you’ll need to pay your monthly expenses, storing the rest in a linked high-yield savings account you can transfer money into and out of when needed.

Variable APYs

Like other high-yield accounts, the rate on a high-yield checking account is variable, which means it can rise or fall depending on market conditions.

💡Expert tip: Periodically check in on your checking account rate. If you find it’s no longer returning a high rate of return, you can transfer your money to a higher-APY account elsewhere.

Alternatives to a high-yield checking account

If you’d rather park your nest egg and earn high yields without financial fuss, look to other high-yield accounts that can accelerate your savings:

High-yield savings account. Unlike high-yield checking accounts, HYSAs offer a safe spot for your longer-term savings. They offer variable rates that are competitive with certificates of deposit, but with flexible access to your money.

Certificate of deposit. A CD guarantees a fixed rate of return on your deposit in exchange for locking access to your money for up to 12 months or longer. CDs differ from a high-yield checking account in that you risk penalties if you withdraw your money before your CD matures — though a short-term CD ladder may be a way to leverage high-rates with rolling returns while interest rates are strong.

Money market account. Money market accounts combine the rates of a high-yield account with a debit card and check-writing abilities — though transaction limits mean it’s not best for everyday banking.

Frequently asked questions: High-yield checking accounts

​​How can I be sure my money is safe with a high-yield checking account?

High-yield checking accounts are federally insured by either the Federal Deposit Insurance Corporation or the National Credit Union Administration for up to $250,000 per account, protecting your money against bank failure.

Digital-only accounts offered by financial technology companies like Lending Club or SoFi partner with FDIC-insured banks to provide deposit accounts that are also protected by the government for up to $250,000. Insurance is automatic, which means you need to look only for terms like “member FDIC,” “FDIC insured” or “NCUA insured” to rest assured your account balance is safe.

What’s the difference between a high-yield checking account and a high-yield savings account?

Both accounts offer a safe, stable way to earn high yields on your balances. But while a high-yield checking account is designed to hold enough money for you to conduct your day-to-day banking, often imposing earning limits to discourage you from using it for longer-term savings, a high-yield savings account is designed for nurturing your nest egg — with higher APYs to accelerate its growth.

What is an annual percentage yield?

Called the APY, an annual percentage yield is the total amount of interest you’ll earn on your deposit over one year, including compound interest, expressed as a percentage.

APYs can be fixed or variable, depending on the type of deposit account. Variable APYs — like those of high-yield checking accounts — can increase or decrease with the market, which means you’ll want to monitor your rate periodically to ensure you’re getting the best available.


National Rates and Rate Caps, FDIC. Accessed April 16, 2024.

About the writer

Kelly Suzan Waggoner is personal finance editor at AOL. Before joining AOL, Kelly was managing editor at Bankrate and editor-in-chief at Finder, where she led a team focused on helping people to make unfamiliar financial decisions around banking, lending, credit cards, investments and more. In addition to Bankrate and Finder, Kelly’s expertise has been featured in Nasdaq, Lifehacker and other publications. Today, she’s dedicated to empowering those planning for, newly entering or fully enjoying retirement to get the most out of their finances — whether that’s saving money, managing debt, maximizing rewards or growing their wealth.

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