To stimulate the economy, the Federal Reserve has been keeping interest rates very low. Good deal if you’re interested in securing a home loan or credit card, but it’s been a pain for those who depend on secure income from savings accounts. The current average yield on a checking account, for example, is as just a little over half a percent.
If you’re tired of your money just sitting around and actually losing value with inflation, high-yield checking is one alternative.
Also called “rewards checking,” high-yield checking is just as it sounds – it pays interest rates that beat traditional accounts, currently more than triple, at an average of 1.64%. Earning those higher rates is easier said than done, however, with most institutions having more than a few requirements.
Recently, the folks at Bankrate canvassed banks, thrifts and credit unions across the country. They surveyed 56 high-yield checking accounts for their 2013 High-Yield Checking Survey to detail the interest rates, account restrictions, requirements and other variables important to consumers when considering a high-yield checking account.
All of the high-yield checking accounts surveyed by Bankrate.com require electronic statements. Nearly all require 10 or more debit card transactions each month. Another common requirement: direct deposit and/or automated bill payments. According to Bankrate’s chief analyst Greg McBride, consumers should also be aware that the high-yields only apply up to a certain limit, or “balance cap.” The average cap is $17,102.
“You’ve got to determine, ‘Am I going to be able to meet those requirements consistently, how much cash am I putting in and what’s going to be the best fit for me in terms of yield and balance cap so I can maximize my earnings?’” McBride says. “You’ve got to do a little legwork and make sure it’s going to be a fit for you.”
If you’re the kind of consumer that handles most of your banking electronically, doesn’t constantly need ATM access and isn’t worried about going above the balance cap, it sounds like a good fit. Luckily, high-yield checking accounts are readily available with 61% available nationally.
Photo Courtesy, kenteegardin.