There are many ways to save and manage your money. You can put it all in a savings account and receive interest without the flexibility of a checking account. Or, you can also open a checking account so that you have easy access to your money. But this doesn’t offer interest. The best option is to open an interest rate checking account. This type of account allows you convenient access to your funds while you receive a good interest rate. Doing this may give you the best of both worlds.
What Type of Checking Account Pays Interest?
While it is uncommon for most checking accounts to pay interest on your funds, there is a type of account called a NOW Account (Negotiable Order of Withdrawal account) that can work around this rule. A NOW account, is not legally a checking account so it can pay interest on your funds while you still have everyday access to it. The main difference between a NOW account and a regular checking account is that a NOW account is generally obtained through a bank that is not a member of the Federal Reserve.
Another Form of Interest Rate Obtained Through a Checking Account
While most banks that are members of the Federal Reserve cannot legally pay interest on a checking account, another form of interest is rewards checking. For example, when you use your checking account for everyday purchases or charges on your debit card you may receive rewards, such as cash back or dividends after a certain amount of banking transactions.While it is not technically interest, it does yield a type of interest for you. Always check with your bank or financial institution to see what types of rewards are available to you.
In today’s economy, it is vital that you find ways to make your money work for you. Whether it is an interest rate checking account or another type of account that yields rewards or benefits, knowing that you are getting a little extra each month can make all the difference.