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What Are High-Interest Checking Accounts?

Rebecca Safier • June 30, 2023

A young woman sits on her couch with her laptop.

High-interest checking accounts offer a convenient spot to store and access your cash while earning higher-than-average interest, but be on the lookout for hidden fees.

What is a high-interest checking account?
A high-interest checking account is a type of checking account with a higher-than-average interest rate. With this account, you can deposit and withdraw cash while earning interest on your balance.

If you want to grow your bank account balance (and who doesn’t?), consider a high-interest checking account. High-interest checking accounts offer higher-than-average interest rates so that you can earn money on your balance over time.

Interest rates are listed as a percentage, like 1.00% APY (annual percentage yield). While the average checking account APY is just 0.07%1, some banks offer higher yields on their checking accounts.

These high-yield checking accounts are convenient for storing and withdrawing cash and paying your bills and offer the added perk of interest earnings on your balance.

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How does a high-interest checking account work?

High-interest checking accounts work similarly to a standard checking account but with the ability to earn interest. You can deposit and withdraw money and are given a debit card. You then earn interest based on your balance.

Earning interest means the bank takes a percentage of your balance and pays you that amount. To be considered a “high-interest” checking account, this percentage (APY) is above average. According to the Federal Deposit Insurance Corporation (FDIC), the average checking interest rate is currently 0.07%.1

Each bank or credit union will set its own checking account interest rates. This may vary based on the account. Some banks will also give you a higher APY for larger balances. For example, you may earn 0.01% interest on a balance of up to $10,000, but 0.02% on a balance over $100,000.

Other names for high-interest checking accounts

Depending on the financial institution, you may find alternative terms for high-interest checking accounts. For instance, some accounts are called high-yield checking accounts, high-rate checking accounts, or rewards checking accounts.

These terms are generally interchangeable — they can all refer to a checking account that offers a higher interest rate than a standard checking account. Rewards checking accounts may have other perks, like cash-back rewards on a debit card or reimbursement for out-of-network ATM fees.

High-interest savings vs. high-interest checking

High-interest savings accounts function similarly to high-interest checking accounts. Compared to the 0.07% average interest rate for checking, the average savings interest rate is 0.40%.1 Like high-yield checking, high-interest savings accounts pay you a percentage of your balance. With high-interest accounts, this rate often exceeds 0.40%.

Interest-earning savings accounts are typically more common. Checking accounts tend to be more active, with money frequently being deposited and withdrawn from the account. Savings accounts are designed for slow, long-term growth. There are fewer withdrawals as people aim to keep their balance growing over time.

High-yield account rates can fluctuate if the interest rate is not fixed. In other words, the percentage of interest you earn when you sign up could change at any time.

Here are some differences between a high-interest checking account and a high-interest savings account.

Average interest rate0.07%0.40%
Withdrawal limitsUnlimitedVaries by bank
ConvenienceDebit card, ATM, online bill payment, appATM, app

Did you know? Chime’s high-yield savings account has a 2.00% APY.2 You can also grow your savings with our Automatic Savings features.3

Pros and cons of high-interest checking accounts

High-interest checking accounts have benefits and drawbacks. They may help you grow your balance if you meet certain requirements. They may also encourage you to spend less to keep a higher balance for more interest.

There are also drawbacks to consider when it comes to high-yield checking accounts. Some of these accounts have large opening deposit requirements and ongoing balance requirements. This means you need a large sum of money in your account each month to maintain all the benefits.

Checking account interest rates can also be unpredictable, especially if they have a variable APY. In other words, the interest you earn when you open an account can change at any time.

Often, accounts that seem to have many benefits have hidden fees. If you’re unaware of these fees upfront, you may be surprised by monthly charges.

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How much does a high-interest checking account cost?

High-interest checking accounts may have higher fees. Common fees and costs include:

Understand all fees and balance requirements when considering a high-yield checking account. For many, banking with no fees might be your priority. If that’s the case, you may want to consider signing up for an online-only financial institution that does not charge as many fees as a traditional bank might.

Is a high-yield checking account right for you?

A high-interest checking account pays you a small percentage based on your account balance. This is ideal for people with large amounts of money in their accounts. However, make sure you’re looking into not just how much money you might get, but also how much you’ll be spending on potential fees to make the right decision for you and your finances.

For more options, learn about the four must-know types of bank accounts.

High-interest checking account FAQs

Are interest-earning bank accounts worth it?

Interest-earning bank accounts have pros and cons. You can earn a little extra money each month based on your balance. But you need to know the account requirements, like the minimum balance required to earn interest.

What is a good checking account interest rate?

The average checking account interest rate is 0.07%. Some banks have lower rates, and some have higher. Ultimately, it depends on the financial institution you choose, what type of account you have, and what your balance is.

What fees are associated with a high-interest checking account?

High-interest checking accounts may have an opening deposit requirement, minimum balance requirement, monthly service fee, overdraft fee, ATM fee, or other fees. Read the account terms and conditions so you are aware of any potential fees.

What is a good high-interest checking account interest rate?

Some banks advertise an APY as high as 3%, but be sure to read the fine print. Your rate may depend on how high your balance is and whether or not you meet the requirements. If not, your APY on your interest checking account could drop significantly.

Who pays the highest interest rate on checking accounts?

You can typically find the highest checking account interest rates from online banks and credit unions. Rates are variable and will differ by institution, so compare current offerings when you’re ready to open your account.

Where can I get 5% interest on my money?

You can find interest rates close to 5% on some high-yield savings accounts and certificates of deposit (CDs). Rates vary by institution and can change with market conditions. Your rate on a CD may vary depending on your CD term and balance. You’ll typically only earn the advertised APY if you keep your CD until maturity. If you try to withdraw your money early, you could be subject to penalties.


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1 Information from FDIC's National Rates and Rate Caps as of June 13, 2023 :

2 The Annual Percentage Yield ("APY") for the Chime Savings Account is variable and may change at any time. The disclosed APY is effective as of June 13, 2023. No minimum balance required. Must have $0.01 in savings to earn interest.

3 Save When I Get Paid automatically transfers 10% of your direct deposits of $500 or more from your Checking Account into your Savings Account.

~ Out-of-network ATM withdrawal and over the counter advance fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.

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