What Is a High-Yield Checking Account?

You work hard for your money—and your money should work just as hard for you. One smart way to make it happen is with a high-yield checking account.
High-Yield Checking

While your money might not don a hard hat or business suit, a high-yield checking account allows your cash to earn interest for you, even when you’re off the clock.

Let’s dive in to learn more about how these accounts work and how a high-yield checking account can help you make the most of your money.

Tip: Check out our glossary at the end of the article to better understand high-yield checking account terms.

What is a high-yield checking account?

A high-yield account differs from a regular checking account (where you may earn little to no interest) in one important way: your money earns a solid interest rate while it sits in the bank. That means you end up with extra cash without lifting a finger — cash that you can use to hit future savings goals or grow your emergency fund. Pretty good deal, right?

How do high-yield checking accounts work?

Earning interest is a simple way to make money on your money. Let’s dive into the details of how a high-yield checking account could work for you.

Where do I open a high-yield checking account?

Great news: you have tons of options when it comes to opening a high-yield checking account. Many banks and credit unions offer them (as do other financial services providers).

Keep in mind that if you travel frequently or plan to move, an online banking service provider may be a great choice for opening a high-yield account. Online-only banking service providers and credit unions often have better rates (thanks to lower overhead costs), and you don’t have to worry about whether there is a physical branch in your area—your high-yield checking account packs its suitcase right along with you.

How much interest will I earn?

Your exact interest rate depends on the banking services provider, but usually a high-yield checking account gives you a higher interest rate than a regular checking account, and may even be better than a traditional savings account in some cases. Simple’s high-yield checking account, for example, currently offers a rate quite a bit higher than the national average for interest-bearing checking accounts.

Another factor that determines how much interest you earn is how often the banking services provider compounds interest. Here’s how it works: your money earns interest, and the provider credits that interest to your account on a certain schedule— daily, weekly, or monthly. Once that interest is added to your balance, you start earning interest on both your initial deposit and the interest. This is how banks figure the annual percentage yield (APY): the amount of interest you will earn in one year after factoring in the compound interest.

Finally, know that many high-yield checking accounts have variable interest rates, which means their rates may go up or down throughout the year. If you’d prefer a fixed interest rate that will provide a more consistent return on your funds, consider a CD or similar product.

What is the minimum amount to open a high-yield checking account?

A common misconception about high-yield checking accounts is that you have to make a relatively large deposit to open one. In fact, many providers, like Simple, have a minimum as low as $0.01.

After you open your account, however, some accounts do require you to keep a certain balance to earn the advertised above-standard rate. Dropping below that balance may mean you’ll earn a much-reduced interest rate or even no interest at all. You also might have to meet other requirements. According to the FDIC, qualifiers for premium rates often include:

  • “engaging in a certain number of debit card transactions monthly (usually 10 to 15 transactions),
  • making at least one direct deposit or Automated Clearinghouse (ACH) payment monthly,
  • enrolling in the bank’s online banking program, and
  • agreeing to receive electronic bank statements.”

If you don’t achieve these qualifiers, your interest rate could drop or the provider might charge you a hefty maintenance fee.

And, keep in mind that your account’s high interest rate might not last forever even if you maintain high balances — sometimes providers offer high introductory rates for a limited time. Or you might only get the special interest rate on the first $500 in your account, and then it drops after that. Take a look at these specific requirements before funding your account to ensure you’re depositing enough to get the interest rate.(P.S. Simple’s Protected Goals Account offers the same competitive rates no matter your account balance and doesn’t require qualifiers! We also don’t charge monthly maintenance fees or allow you to overdraft your account.)

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

The biggest difference between account types is how easy (or not) it is to access your money. With a savings account, you don’t normally receive a debit card or ATM card. Plus, sometimes you can only withdraw money from a savings account six times a month (due to federal regulations), while withdrawals from a high-interest checking account are unlimited.

Like most deposit accounts, savings accounts and high-yield checking accounts are both insured up to the legal limit if the provider is a member of the FDIC.

What are typical high-yield checking account fees?

The upside? It’s possible to find high-yield checking accounts with low monthly fees; a few providers (like Simple) have minimal fees. The downside is that some providers might charge you in other ways. You might be hit with fees if you use an ATM outside of a provider’s network. This money (e.g., $2 for every withdrawal) can quickly add up, so look for a provider that has a large ATM network.

The trick is to read the fine print BEFORE you open your account and ensure that either you can meet all requirements or choose a provider that has minimal requirements, as well as fees.

Why should you open a high-yield checking account?

If you’re looking for an account where you can both easily access your money AND earn interest, a high-yield checking account is a great bet. As an added bonus, your Simple high-yield checking account provides creative ways to keep you from accidentally spending your savings.

For example, you might have a regular checking account for paying bills and budgeting. But then you could also have a separate high-yield checking account where your savings earn interest and grow safe and sound to help you hit your savings goals. You can still easily access this money and move your money between accounts as needed. It’s a win-win situation.

Manage and earn money through a high-yield checking account.

So there you have it: a high-yield checking account means that your money is working hard right alongside you. It’s available for transactions, bills, and more—growing all the while—thanks to compound interest. Simple offers a high-yield checking account with a competitive APY. The account is easy to open, there are no fees, and no minimum balance is required to open or maintain. Simple also has a large ATM network, built-in budgeting tools, and an easy-to-use app.

Getting started with Simple is, well, simple… you’ll start by opening a standard checking account, then also open a Protected Goals account (Simple’s high-yield checking account) to tap into those premium rates.

Learn more about high-yield checking accounts at Simple!

High-yield Checking Account Glossary:

Annual percentage yield: The actual return you’ll earn in a year thanks to compound interest.

Compound interest: The interest earned on your checking account balance and on the credited interest. This differs from simple interest, which only accrues based on your principal balance deposited into your account.

ATM fees: There are two main kinds of ATM fees to watch out for. Bank ATM fees (the amount charged by your provider to withdraw funds from an out-of-network ATM) and ATM owner fees (the amount charged by the owner of the ATM). Some banks don’t charge out-of-network ATM fees and/or refund limited ATM fees.

Bank fees: In addition to ATM fees, providers may charge other fees such as monthly service fees, overdraft fees, foreign transaction fees and the like. Review your account documentation carefully so that you’ll understand what may trigger a fee on your account.

Automated Clearing House (ACH): An electronic fund-transfer network for payment transactions.

Disclaimer: Hey! Welcome to our disclaimer. Here’s what you need to know to safely consume this blog post: We do our best to make sure information is accurate as of the date of publication, but things do change quickly sometimes. Any outbound links in this post will take you away from Simple.com, to external sites in the wilds of the internet; neither Simple nor our partner bank, BBVA USA, endorse any linked-to websites; and we didn’t pay/barter with/bribe anyone to appear in this post. Individual situations will differ; consult your favorite finance, tax or legal professional for specific advice. And as much as we wish we could control the cost of things, any prices in this article are just estimates. Actual prices are up to retailers, manufacturers, and other people who’ve been granted magical powers over digits and dollar signs.

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