What Is an Interest Checking Account?

Quick Answer

Interest checking accounts provide a return on your money, but they might also come with higher fees or require that you maintain a higher account balance to earn the rate.

Banker calculating interest on an interest checking account.

Ideally, your money will work for you by earning a return whenever it's deposited into a bank account—but not all checking accounts pay interest. Searching for and opening a checking account that does earn interest can pay off, but the drawback is that interest checking accounts may charge higher fees or have high balance requirements. Here, we discuss what interest checking is, pros and cons of this type of account and how to open one.

What Is an Interest Checking Account?

Often, checking accounts don't pay much (or any) interest. That's because the main job of a checking account is to help you handle daily transactions, not provide you with a return.

An interest checking account is a special type of checking account that offers an annual percentage yield (APY), but one that's usually not very high. The average rate for interest checking accounts is just 0.06%, according to FDIC data. Over 12 months, 0.06% the APY earned on $5,000 would be just $3, enough to buy a coffee or pack of gum. However, in some cases, online-only banks may offer higher checking account APYs of 0.10% to 0.25%.

The opportunity to earn interest on a checking account typically comes with strings attached or rules you have to follow to earn that interest. For example, with an online-only bank account, the drawback is you don't get access to physical branches with tellers to handle banking. Interest checking accounts at major banks could also come with higher monthly fees, and you might have to maintain a specific balance to qualify for the higher APY.

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Pros and Cons of Interest Checking Accounts

Like most financial products, interest checking accounts have advantages and disadvantages. Before opening an interest checking account, consider these pros and cons:


  • Money earns interest. Your cash can earn a bit of interest while it's in the account.
  • Cash is easily accessible. Money in an interest checking account can easily be accessed through external transfers, debit card transactions and ATM withdrawals.
  • Money is safe. Up to $250,000 of your money is guaranteed by the government per account ownership category when your bank or credit union is insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA).


  • Higher monthly fees. Interest checking accounts may have higher monthly maintenance fees than accounts that don't earn interest. However, you may be able to have these fees waived by maintaining a certain account balance.
  • Yields are generally still low. While interest checking accounts offer you some return, it's not going to make you rich. High-yield savings accounts, certificates of deposit (CDs) or investment accounts could provide a better return for savings.

How to Get an Interest Checking Account

You can find interest checking accounts at major banks, credit unions and online banks. For example, Wells Fargo currently offers Prime Checking with an APY of 0.05% on balances up to $99,999 and 0.10% on balances over $100,000. The monthly account fee for Prime Checking is $25 unless you maintain a balance over $20,000. Ally Bank is an online-only bank that currently offers 0.25% APY on its checking account with no monthly fees or balance requirements.

Below are steps to help you find the best interest checking account for you:

  1. Shop around. Search "interest checking" in a web browser to bring up results for interest checking accounts available at different banks and credit unions.
  2. Compare APYs, terms and fees. Review account terms and costs to find the best fit for your needs. Consider that the account with the highest APY may not always be the best if there are high fees and you need to maintain a high balance to have them waived.
  3. Review qualification requirements. After selecting an account, review the application requirements. For example, if you're looking at an account at a credit union, find out what's required to become a credit union member.
  4. Open an account. To open a bank account, financial institutions usually ask for your name, Social Security number or taxpayer identification number, address and government-issued ID. You may also need to provide cash or an external account number to fund your new account.

Should You Get a Checking Account That Pays Interest?

Ultimately, interest earned is just one factor to consider when shopping around for a new bank account. Minimum balance requirements, banking features, customer service, availability of ATMs and maintenance fees are other important aspects to compare one account to the next when choosing where to put your money.

An account with a high APY may not make sense if the monthly fee eats into the money earned. And if you have extra money you don't need to use often, consider opening a tiered savings account or high-yield savings account for those funds instead. These accounts are designed for you to stack cash for longer-term goals and provide a higher return while your money is parked.