Checking accounts are like a pair of khakis slacks: You should have at least one, but shopping for them is a chore. You know you need a checking account—preferably one without fees—but most people think it’s not going to yield more than a token amount in interest.
These high yield checking accounts break this tired paradigm, featuring sky-high interest rates that can put even the best savings accounts to shame. In this article, we’ll help you make an informed decision about whether one of these high yield checking accounts are right for you and your financial goals.
How we picked the best high yield checking accounts
We followed a strict approach when selecting these accounts. We used the online rate finder for FDIC- or NCUA-insured rewards checking accounts on DepositAccounts.com, another LendingTree.com-owned site, to list the top 10 high yield checking accounts with the highest rates, assuming a deposit amount of $100.
Credit unions were only included if they allow membership to anyone (such as by making a donation to their chosen charity). Finally, we filtered out any high yield checking accounts that are not available nationwide, or that carry a health rating of below a B.
The Best High Yield Checking Accounts in 2021
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Institution
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APY
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Monthly service fee
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La Capitol Federal Credit Union — Choice Checking
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4.25% APY on balances up to $3,000
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2.00% APY on balances between $3,000 to $10,000
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0.10% APY on balances over $10,000
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$8 (avoidable with a $1,000 minimum balance or 15 non-ATM debit card transactions each month)
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Consumers Credit Union — Free Rewards Checking
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4.09% APY on balances up to $10,000
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0.20% APY on balances between $10,000 and $25,000
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0.10% APY on balances over $25,000
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$0
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T-Mobile Money Checking Account
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4.00% APY on balances up to $3,000
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1.00% APY on balances greater than $3,000
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$0
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Evansville Teachers Federal Credit Union Vertical Checking
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-
3.30% APY on balances up to $20,000
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$0
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Market USA Federal Credit Union VIP Checking Platinum Tier
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3.01% APY on balances up to $15,000
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0.01% APY on balances over $15,000
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$0
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Security State Bank Interest Reward Checking
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3.00% APY on balances up to and including $10,000
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0.25% APY on balances over $10,000
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$0
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Lake Michigan Credit Union Max Checking
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3.00% APY on balances up to $15,000
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$0
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INOVA Federal Credit Union Shield Checking
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3.00% APY on balances up to $15,000
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0.07% APY on balances over $15,000
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$5
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MECU Credit Union RewardChecking
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2.96% APY on balances up to $10,000
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0.15% APY on balances $10,000 and over
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$0
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Western Vista Federal Credit Union Panorama Checking
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2.53% APY on balances up to $15,000
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0.01% APY on balances greater than $15,000
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$0
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La Capitol Federal Credit Union — Choice Checking
- Minimum amount to open: $50
- Requirements to earn the high APY: Make at least 15 debit purchases per month.
- Monthly service fee: $8; waived if you either have a balance of at least $1,000 or make 15 non-ATM debit card transactions each month and use eStatements.
- ATM fees: None
- ATM refunds: Up to $25 in out-of-network surcharges (the money the ATM’s owner charges you) per month if you are signed up for eStatements
Consumers Credit Union (IL) — Free Rewards Checking
- Minimum amount to open: $5
- Requirements to earn the high APY: You must complete the following requirements each month: 1) Complete at least 12 signature-based debit purchases, 2) Receive direct deposits, ACH credits or mobile check deposits totaling $500 or more monthly, 3) Be signed up for eStatements and 4) Spend $1,000 or more with a Consumers Credit Union Visa credit card each month.
- Monthly service fee: No monthly service fee.
- ATM fees: If you meet the requirements to earn the high APY, you won’t pay any ATM fees.
- ATM refunds: You are eligible for refunds on all ATM fees as long as you meet the requirements to earn the highest APY.
T-Mobile — T-Mobile Money Checking Account
- Minimum amount to open: $0
- Requirements to earn the high APY: You must 1) Be enrolled in a qualifying T-Mobile postpaid wireless plan, 2) Be registered for perks with your T-Mobile ID and 3) Make at least 10 qualifying purchases using your T-Mobile Money card that post before the last business day of the month.
- Monthly service fee: None
- ATM fees: None
- ATM refunds: None
Evansville Teachers Federal Credit Union — Vertical Checking
- Minimum amount to open: $25
- Requirements to earn the high APY: You must complete the following items each month: 1) Have at least one direct deposit into your account, 2) Be enrolled in e-statements, 3) Use your debit card to make at least 15 purchases per month, and 4) Log on mobile or online banking once.
- Monthly service fee: None
- ATM fees: None
- ATM refunds: Up to $15 of out-of-network ATM fees per month.
Market USA Federal Credit Union — VIP Checking Platinum Tier
- Minimum amount to open: $0
- Requirements to earn the high APY: You must meet following requirements: 1) Enroll in e-Statements, 2) Have a monthly direct deposit of at least $500 3) Make 12 visa debit card purchases per month that are a minimum of $5 each and 4) Make three bill payments per month, of at least $20 each, using Market USA’s Bill Pay service.
- Monthly service fee: None
- ATM fees: Access to nearly 30,000 surcharge-free CO-OP and Alliance One Network ATMs nationwide
- ATM refunds: Eight free monthly transactions at CO-OP, Alliance One, Star and Plus ATMS with a minimum direct deposit of $500 required. ATM surcharges may still apply to Star and Plus ATMs
Security State Bank (KS) — Interest Reward Checking
- Minimum amount to open: $100
- Requirements to earn the highest APY: You must: 1) Have at least 11 debit purchases post and settle per statement cycle and 2) agree to receive eStatements.
- Monthly service fee: None
- ATM fees: None
- ATM refunds: None
Lake Michigan Credit Union — Max Checking Account
- Minimum amount to open: $5
- Requirements to earn the highest APY: You must: 1) Have at least one monthly direct deposits 2) Enroll in eStatements, 3) Use your debit card at least 10 times per month for purchases and 4) Log into home banking a minimum of 4 times per month. A $5 membership fee is also required.
- Monthly service fee: None
- ATM fees: None at LMCU and Allpoint ATMs
- ATM refunds: Up to $10 per month for non-LMCU and non-Allpoint ATMs
INOVA Federal Credit Union — Shield Checking Account
- Minimum amount to open: $10
- Requirements to earn the highest APY: You must: 1) Complete at least eight debit card transactions each statement period and 2) Maintain an average daily balance greater than $3,500.
- Monthly service fee: $5
- ATM fees: None on any INOVA ATM or any ATM in the Alliance One or CO-OP network
- ATM refunds: None
MECU Credit Union — Reward Checking Account
- Minimum amount to open: $25
- Requirements to earn the highest APY: You must: 1) Make 12 debit card purchases per monthly cycle, 2) Make one ACH payment or bill pay or have one direct deposit per month and 3) Enroll in eStatements.
- Monthly service fee: None
- ATM fees: None
- ATM refunds: Up to $20 per month if all qualifiers are met
Western Vista Federal Credit Union — Panorama Checking
- Minimum amount to open: $0
- Requirements to earn the highest APY: You must complete the following items each month: 1) Have at least one direct deposit into your account, 2) Be enrolled in e-statements and 3) Have at least 10 debit card purchases of $5 or more posted in each statement cycle.
- Monthly service fee: None
- ATM fees: None
- ATM refunds: Up to $25 of out-of-network U.S. ATM fees per month, with a maximum of $5 per transaction.
How are these banks able to offer such a high APY?
Did you notice that most of the institutions offering high yield checking accounts tend to be smaller names that you’ve probably never heard of? It turns out there’s a good reason for that, and it all has to do with the Dodd-Frank Act, a set of sweeping financial regulations passed by Congress in the wake of the Great Recession.
Back when the Dodd-Frank Act was passed in 2010, a tiny legislative nugget called the Durbin Amendment was included in the text. This amendment limited the swipe fees that big banks can charge merchants for each purchase that one of their customers makes using a debit card.
Suddenly, big banks (defined as institutions with at least $10 billion in assets) could only charge half as much per swipe as they had been doing, and swipe fees became a lot more lucrative for smaller banks and credit unions instead.
That’s why so many smaller institutions have strict rules requiring you to use your debit card each month. According to the Federal Reserve, in 2016 smaller banks earned anywhere from 18 to 65 cents for each debit card swipe, compared to a maximum of just 22 cents plus 0.05% of the purchase price for larger banks.
Say, for example, a smaller bank requires you to make 10 debit transactions per month, and earns 65 cents from each transaction. Your bank would then earn $6.50 from your spending that month.
That is where the high interest rates come from. It’s also why the high interest rates are generally capped to smaller balances, so that you don’t earn too much money and negate all the swipe fees that the bank earns.
Is it worth meeting requirements to go after the high APY?
Some of these high yield checking accounts have a lot of requirements.
If you prefer to use debit cards, chances are you’ll be able to easily meet the minimum debit swiping requirements for most of these accounts. On the other hand, if you’re a cash or credit card junkie, you may find yourself frequently worrying at the end of the month about whether or not you’ve met the minimum debit swiping requirements. In this case, a high yield checking account might not be right for you.
Another thing to consider is that many of these banks require you to make a signature-based debit transaction, rather than a PIN-based debit transaction for it to count. Unfortunately, this is slightly less secure than using the PIN-based payment method.
You’ll also need to avoid making a rush of charges at the end of the month to meet the spending requirements. That’s because banks and credit unions will usually only count a charge that has finished posting to your account towards meeting the monthly swiping requirement. It can take a few days for debit swipes to post to your account, so it’s better to get these charges in early to make sure they post to your account in time to count.
The good news is that checking accounts aren’t designed to hold significant amounts of cash. That’s what a savings account is for, and you can still earn pretty good interest rates with a high yield savings account (although still nowhere close to these high yield checking accounts).
If you’re going to keep a smaller deposit in your checking account anyways, why not earn as much as you can from it—especially if you know you’ll have an easy time meeting the requirements?
Source: https://www.magnifymoney.com/blog/earning-interest/best-high-yield-checking-accounts376922578/
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