An interest checking account is a checking account that pays interest on the balance to the account holder.
The primary use of checking accounts is for spending rather than saving, so it’s not common to find very competitive rates. However, there are checking accounts that earn interest.
Where to find interest checking accounts
You can easily open an interest checking account in-person at a traditional brick-and-mortar bank or online at a bank’s website. Online banks, however, typically offer higher rates.
Ally Bank is a good example of an online bank that offers a high-interest checking account with tiered rates based on your balance.
Heritage Bank also offers an interest checking account online — Heritage Bank eCentive checking account — that earns a competitive rate. The catch, however, is that you must have a qualifying balance and make at least 10 debit card transactions per month. If you are unable to do that, then you will not earn any interest.
Interest checking accounts aren’t for everyone as they are harder to find and qualify for; however, if you’re able to meet the requirements then you could enjoy higher than usual interest rates.
Interest checking accounts can include rewards checking accounts. Rewards checking accounts let you earn cash back on your debit card purchases and may also help you earn interest on your balance.
What to watch out for
While earning interest on your balance is enticing, it’s not always as simple as having a bank account. For some accounts, there are strict restrictions on when you can earn interest. Some common restrictions include:
- Minimum balance requirements
- A required number of transactions
So before opening a new checking account, get familiar with what the rules and requirements are and see if the account fits your spending habits. Also make sure you won’t have to pay a monthly fee in order to earn some interest.
Earning interest can be a nice added bonus to a checking account — just be sure to read the fine print.
Featured photo by Kathrin Ziegler of Getty Images.