Bankrate's fall '06 checking study: Fees rise again
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Interest-bearing accounts a poor choice
A sharp contrast between interest and noninterest checking accounts will soon become apparent. But let's start with the most obvious difference between the two -- interest earnings.

Here, there is good news and bad news. The good news is that the average yield is the highest in more than three years. The bad news is that, at 0.34 percent, the average yield is still dreadfully low. In other words, despite the sharply higher interest rates of the past two years, if you're holding money in an interest-bearing checking account you're likely still waiting for the winds of interest rate fortune to blow your way. See interest yield details.

Minimum balances up, too
While the minimum opening deposit for both interest and noninterest accounts increased to new highs in this edition of the survey, the fact is the requirement is a lot higher for interest-bearing accounts. The threshold to get what passes for interest earnings shot higher to $615.41, a 43 percent increase from the spring survey. While the average minimum opening deposit for a noninterest account also increased by a notable percentage, up 21 percent since the spring, the average is still a very reasonable $87.67. See minimum balance details.

We're just getting started.

The balance requirement to avoid fees on interest bearing accounts rose to a new high -- again. Account holders must now strand an average of $2,660 in an interest account, at a pitifully low yield of 0.34 percent, just to avoid fees. Noninterest accounts are a different story, with the average just $209.72, the second lowest level ever found in the survey.

Average service fees flat or lower
And about those fees you're trying to avoid? For interest accounts, the average monthly service fee remains within a well-established range at $10.74. But for noninterest accounts, the average monthly service fee hit a new low of $2.52.

Let's recap. Interest accounts pay very little in the way of interest but require an initial deposit that is 7 times that of noninterest accounts just for the privilege of earning interest. You'll also need to strand more than $2,600 in the account to avoid fees, and if you don't, expect to be relieved of an average of $10.74 of your hard-earned money each month.

By now, you're probably asking yourself why in the world you'd want to trouble with an interest checking account in the first place. That's a fair question. After all, you'd be better-served looking for a free checking account, one that has no fees or balance requirements regardless of how many checks you write, and devoting the balance that would otherwise be stranded at low returns toward a high-yield money market or savings account. You'd still maintain access to the money when needed, would earn yields exceeding 5 percent on your savings, and not be faced with a flurry of fees and balance requirements each month. To find the best-yielding savings and money market accounts, use Bankrate's search tools.