Earning Interest on Your Checking

Written by Charlotte Wood (last updated August 18, 2017)

Until I worked at a bank during high school I had no idea that your checking account could earn interest just like your savings account. Hooray for earning interest on your regular spending money! While it's a great new banking innovation and serves as a big draw to customers, there are a few caveats surrounding interest checking that need to be kept in mind.

Interest checking is most definitely an excellent banking perk; who wouldn't want to earn extra money on funds that aren't specifically set aside for savings? Another plus to interest checking is the fact that the interest rates for these kind of accounts are significantly higher than the half a percent typical for traditional savings accounts. Also, the interest checking accounts I've come across are tiered so that the higher balance you have, the higher interest rate your money earns. So if everyone would like interest checking why then doesn't everyone have it? The way banks weed out those who have interest checking is through fees and balance requirements.

The bank where I worked had a balance requirement for their interest checking or a pretty high monthly fee. This worked well because those with high balances who could really afford the monthly fee didn't have to pay it while those who had a harder time paying the extra didn't qualify for the exemption. In my experience, interest checking follows those with money (successful home investors for example).

Interest checking is definitely a splendid idea, but because it's such a splendid idea, banks have to weed out its users. If you do decide to open up an interest bearing checking account, try and make sure you qualify for the account. Whether it's free after a certain balance level or you really do need to maintain a specific balance, make sure you can fulfill those requirements because if not, you could get yourself into more trouble than the 2.5 percent interest is worth. Earning extra money on your spending money is a most wonderful idea, but do be careful about the conditions of the account and the other obligations involved. If you can't afford it or don't meet the recommended (or requisite) conditions, then don't try and go for an account that's better suited for your finances.

Author Bio

Charlotte Wood


Hold Pleats with a Paper Clip when Ironing

Pleats are sometimes so hard to iron and sometimes even seem impossible. Fortunately there is a way to successfully iron ...

Discover More

Making Your Hair Less Greasy

Greasy hair is never an ideal hair type, but fortunately there are ways to deal with it. Here are a few tactics you can ...

Discover More

Discussing Finances with Your Partner

Money discussions can be uncomfortable and frustrating, but they need not be. If you can just approach the conversation ...

Discover More
More Money Tips

Teaching Teens about Checking Accounts

Teaching teens about checking accounts is a great way to see if they are really ready for some of what life can throw at ...

Discover More

Balancing Your Checkbook

Balancing your checkbook can be a daunting, miserable, and financially frustrating endeavor, however if you understand ...

Discover More

Teaching Children about Checking Accounts

It should be the goal of any good parent to teach their children how to survive and thrive in the world, and that ...

Discover More

If you would like to add an image to your comment (not an avatar, but an image to help in making the point of your comment), include the characters [{fig}] (all 7 characters, in the sequence shown) in your comment text. You’ll be prompted to upload your image when you submit the comment. Maximum image size is 6Mpixels. Images larger than 600px wide or 1000px tall will be reduced. Up to three images may be included in a comment. All images are subject to review. Commenting privileges may be curtailed if inappropriate images are posted.

What is 8 + 8?

There are currently no comments for this tip. (Be the first to leave your comment—just use the simple form above!)