Many credit unions put a cap on the amount of money in a checking account that can earn the highest yields on interest checking. This cap is usually around $25,000, Kelly says. Deposits beyond that amount may earn a reduced APY or no dividend at all.
It may seem odd that larger sums of money deposited into a checking account could earn lower rates, but limits exist because there tends to be less account activity beyond those high-dollar thresholds, Kelly says.
The less activity in a checking account, the less of a chance for the financial institution to earn revenue on that account, he says. And with less revenue, it would be harder for a credit union to pay out a higher yield.
"The revenue the credit union would generate may not make up for the cost of that type of account," Kelly says.
On the flip side, there are likely to be no or very low minimums with credit union interest checking accounts, says Kelly. "If you only have $5 in your account, you could earn a yield on that $5," he says.