Checking Accounts: Higher Yield Strategies

Checking accounts are known for their convenience and liquidity rather than their ability to earn interest. However, in an era of low-interest rates, everyone is looking for ways to boost their return on funds, even those in their everyday checking accounts.

Here are several strategies for maximizing the yield on your checking account funds.

High-Yield Checking Accounts

Some financial institutions, particularly online banks and credit unions, offer high-yield checking accounts. These accounts offer much higher interest rates than typical checking accounts. To qualify for the higher rate, you may need to meet specific requirements, such as setting up direct deposit, using your debit card a certain number of times per month, or maintaining a minimum balance. It's crucial to understand these requirements to ensure you qualify for the higher rate.

Rewards Checking Accounts

Similar to high-yield checking accounts, rewards checking accounts offer additional perks to account holders. These perks can include cash back on debit card purchases, refunds on ATM fees, or even higher interest rates if you meet certain criteria. Some financial institutions offer tiered rewards, with higher rewards for account holders who meet more of the criteria.

Linked Savings Account

Another strategy to get more from your checking account involves linking it to a high-yield savings account. You can keep most of your funds in the savings account, where they'll earn a higher rate of interest, and transfer money to your checking account as needed. This strategy requires careful management to ensure you always have sufficient funds in your checking account, but it can be an effective way to earn more interest.

Keep Minimal Funds in Checking

Instead of keeping a large balance in your checking account, you can choose to keep only what you need for your monthly expenses and put the rest of your money in higher-yielding accounts. Whether it's a high-yield savings account, a certificate of deposit (CD), or an investment account, your money could potentially earn more than it would in a checking account.

Automated Sweep

Many banks offer an automatic sweep service, which moves money from your checking account to a higher interest-earning account when your balance exceeds a certain limit. This can be an effective way to ensure your money is always working as hard as possible, but it's important to monitor your accounts closely to avoid overdrafts.

Look for Promotional Offers

Banks often offer promotional rates to attract new customers. Keep an eye out for these offers, which can include cash bonuses for opening an account or higher interest rates for a certain period. Just remember to check what the rate will be after the promotional period ends and be ready to switch accounts if it drops too low.

While checking accounts are primarily designed for easy access to your money, they don't have to be a place where your money sits idle. For more information on checking accounts, contact a professional near you.