There are two basic types of account you can have at a bank. First, a savings account that earns a rate of return for the money held on deposit. Second, a checking account that allows a person to pay their bills and conduct other transactions against the deposit in the account. Why isn’t there one account that can serve both needs? Well there is, and it throws in an additional convenience of online banking. It is called online high interest checking account.
An online high interest checking account has three notable features:
- Offers online banking
- Pays interest on the deposited money
- Allows transactions (transfer or withdraw money on demand)
There are also some aspects that may deter you from opening up an online high interest checking account such as:
- A high minimum balance that must be met in order to avoid fees and penalties
- Higher than average checking account balances in order to qualify for higher interest rates
- High interest checking accounts that are only online tend not to have ATM’s associated with them thus increasing the possibility of having to pay those additional charges as well
If you tend to always maintain a high balance in your checking account then you should consider opening up an online high interest checking account. It is important to realize that the money on deposit would only earn between .5%- 1.75% and not live up to its fullest earning potential.