Is Interest Checking Worth It?
By: Staff

If you keep any sum of money in a checking account, you might as well earn some interest on it, right? Well, not necessarily. Interest-bearing checking accounts do offer the benefit of some interest earnings on your money, but the vast majority of interest checking accounts pay shockingly low yields. In exchange for those meager interest earnings you may have to accept some significant restrictions. So are interest checking accounts worth it? The answer depends on the interest rate.

Let’s look at a few examples:

• Security Bank in Springfield IL offers a rewards checking account that pays an APY of 3.510% and only requires a minimum deposit of $1. That’s an impressive rate when you consider that even a 60-month CD is paying about 2.25%. This account has no minimum balance requirement, no monthly service charge and refunds all ATM fees.

The only requirements are 10 debit card POS transactions, one direct deposit or ACH debit, only e-statements can be received and customers must login to online banking at least once per statement cycle. Only local funds are accepted for this account, however.

• Wells Fargo (Stock Quote: WFC) offers Complete Advantage Checking, which earns 0.05% APY on balances over $500. A $12 monthly service fee applies if a $5,000 minimum balance (including credit card) is not maintained or if a $75 monthly automatic transfer to a Money Market Savings account or Wells Fargo Home Mortgage is not made.

These two examples illustrate how broad the differences are in the interest-checking world. Rewards checking accounts from smaller local banks often offer the best yields and terms. The Security Bank checking account offers a superior yield in comparison to almost any other banking product available and it carries very few requirements. If you kept a balance of $5,000 in the account, you would earn $175.50 in a year. On the other hand, the interest checking account from Wells Fargo barely pays any interest at all and has some significant requirements. If you kept a balance of $5,000 in the account, you would earn only $2.50.

To determine whether or not an interest checking account is worth it to you, consider other places you could park your money that would provide a better benefit. According to surveys, the national average interest rate for an interest checking account is 0.144%, while for a savings account the average interest rate is 0.241%, and for a money market account it’s 0.497%. When you look at the averages, it’s a no-brainer to park you cash elsewhere. But it’s more useful to compare actual accounts you might open first.

Some of the highest yields on checking accounts are available through online-only banks.  These banks may also have better terms and lower balance minimums than traditional, nationalized brick-and-mortar banks, but they have their share of drawbacks as well.

To compare rates on interest checking accounts offered in your area, use the Interest Checking Rate Search tool from

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