Watch CBS News

What is a high-yield checking account?

A high-yield checking account has multiple attractive features for users to take advantage of. Getty Images/iStockphoto

Many people have had bank accounts from a young age. As such, they're often familiar with the workings of traditional savings and checking accounts. But in today's high-interest rate climate, there are some other, lesser-known account types that users can benefit from opening, too. This includes certificates of deposit (CD) and high-yield savings accounts. There are also high-yield checking accounts that can be both productive and profitable.

For it to be both, however, users should first understand exactly what a high-yield checking account is. It also helps to know how they work and what the benefits of opening one of these accounts are.

You can earn cash-back rewards with no fees by opening a high-yield checking account here.

What is a high-yield checking account?

A high-yield checking account is exactly what it sounds like — it's a checking account in which users can earn high yields, or interest rates, on the money they keep in the account. Rates on these accounts, while not as high as CDs or high-yield savings accounts, tend to be much greater than what you would secure with a regular checking account. 

You can earn an APY of 3% to 5% on a high-yield checking account today. That's many times the meager 0.07% average available with a regular checking account. But that rate does come with some caveats. Depending on the bank and account in question, users may need to do one or more of the following:

  • Use an online bank: High-yield checking accounts aren't always as accessible as traditional accounts are. To get this type of account with a decent APY, then, users may need to use an online bank or lending institution versus their usual branch with a physical location.
  • Commit to a certain amount of monthly transactions: You typically won't be able to earn the high APY a high-yield checking account comes with until you agree to a certain amount of transactions each month. So, be prepared for that activity in advance. If you're looking for an account that you can "set and forget" that will require little activity while earning a high rate, a CD may be better for you.
  • Set up a direct deposit: Simply keeping funds in a high-yield checking account and making minimal transactions may not suffice for some lenders. They'll also want to see an uninterrupted flow of incoming funds each month, which can easily be obtained by setting up a direct deposit or automated clearing house (ACH) payment. 

If you're comfortable with these requirements, however, and are flexible with a few others (you may need to agree to forego paper statements for electronic ones, for example), then a high-yield checking account can be a smart move for you.

Start exploring your high-yield checking account options here now.

High-yield checking account benefits to know

The major advantage to opening a high-yield checking account is the rate you can earn on your money. But it's not the only one. They're also easy to use and they operate in a way you're already familiar with. So, if you already do most or all of your banking online, it should be a seamless transition. 

Compared to some traditional alternatives, you also may be able to find accounts with minimal fees, allowing your bottom line to grow each month while you still pay your bills as normal. And with the forecast for interest rate hikes unclear, it's possible — if not likely — that rates on these unique account types will be increasing shortly.

The bottom line

Today's high rate environment is hard to navigate for borrowers but it's been a major boon for savers. With CDs, high-yield savings and high-yield checking accounts now offering exponentially more interest than they were just a few years ago, it makes sense to open one or more of these accounts today. High-yield checking accounts, in particular, will provide substantive returns on money you likely already have sitting in a regular checking account. So why not move it over to a high-yield one and start earning higher rates now, and, potentially even higher ones in the near future?

Learn more about your high-yield checking account options here today.

View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.