What Is a High Yield Checking Account?
Most people use a checking account to manage their everyday finances—to pay bills, receive a direct deposit paycheck, make purchases, and more. But certain types of checking accounts, known as high yield checking accounts, can also help you save money.
High yield checking accounts combine the features of a traditional checking account with the benefit of earning dividends, often at higher-than-average interest rates than standard checking accounts. With a focus growing your checking balance through dividends, high yield checking accounts are a smart pick for individuals looking to maximize their earnings while maintaining easy access to their money through features like debit cards and online banking.
What Are the Benefits of a High Yield Checking Account?
The biggest benefit to a high yield checking account is the rate, or annual percentage yield (APY), that you can earn on your account balance. Most standard checking accounts do not earn dividends or earn dividends at a very conservative rate. The highly competitive rates that high yield checking accounts pay allow you to grow your account balance and save for your goals. It is another tool that can be used alongside savings accounts and share certificates (CDs) to help you save smarter.
What are the Requirements of a High Yield Checking Account?
High yield checking accounts often have specific requirements that account holders need to meet in order to qualify for the higher interest rate. These requirements vary between financial institutions, but they largely encourage account holders to engage actively with their account. Often, the requirements can be easily achieved through everyday banking.
High yield checking requirements could include:
- Monthly Transactions: A financial institution may require you to have a certain amount of spending activity on your account, like debit card transactions, automatic transfers, or online bill pay.
- Digital Banking: You may need to use a financial institution’s online banking platform or enroll in electronic statements for your high yield checking account.
- Deposit Minimum: You might need to deposit a certain amount of money into your account each month. You might choose to set up direct deposit for your paycheck to meet this requirement automatically each month.
If you choose to set up a high yield checking account, you will want to be sure it is an account you use regularly so you can earn the higher interest rate and get the most out of the account.
What Can You Do with a High Yield Checking Account?
A high yield checking account can be used for the banking transactions you do every day.
- Spend: Use a high yield checking account to make purchases in person or online with your debit card. Or withdraw cash from an ATM.
- Make Deposits: Set up direct deposit or deposit checks (both in person and through a mobile app) to add to your high yield checking account balance.
- Transfer Funds: Send and receive money from external accounts.
- Pay Bills: Make one-time bill payments or set up Automatic Bill Pay so you never miss a deadline.
- Bank Online: Use Digital Banking to monitor your account, set a budget, track spending, make transfers, and more.
If you actively use your checking account, a high yield checking account can be a great way to make that money work harder for you.
Credit Union 1 now offers High Yield Checking that can earn up to 5.25% APY1—open an account today online, in person, or over the phone.