The idea of a checking account that earns interest is exciting for a lot of people, and with good reason. Almost everyone gets their payments deposited into their checking account, which means you’ll basically be getting free money with no extra effort on your part!
Before you open an interest checking account, though, there are three questions you need to ask to make sure an interest checking account is a good financial fit for you.
Can I Meet the Requirements?
A lot of financial institutions have some prerequisites you’ll have to meet in order for a checking account to earn interest. You might have to use your debit card or log into your online banking account a certain number of times each month, spend a certain amount of money or even maintain a minimum balance in your account.
Whatever the requirements are, you’ll need to be aware of them before you open an account. If you don’t know what they are, the odds are good that you won’t meet the requirements each month and miss out on a lot of interest payments. Worse, you might not realize you can’t meet all the financial institution’s requirements for your checking account to earn interest.
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What Fees Does the Financial Institution Charge for the Account?
While you’re looking into the requirements, you’ll also want to find out what kind of fees the financial institution charges. A lot of interest checking accounts also come with high fees, and these fees can cost you more money than you’ll get from the interest payments. Always ask what fees come with an interest-earning checking account, as well as if there’s any way to get those fees waived.
How Much Money can I Reasonably Expect to Earn?
A lot of people get dollar signs in their eyes when they hear about interest checking accounts. However, the truth is that interest checking accounts usually have an interest rate of around 1%, and financial institutions tend to pay out interest based on the lowest amount you had in your checking account during the month. In other words, most people will be earning a few cents in interest instead of a few dollars.
While this isn’t necessarily a bad thing---a small amount of money is better than no money at all—you should know what you can reasonably expect to earn in interest, especially if your checking account comes with fees. Find out how your financial institution will calculate the interest your checking account earns and look at previous balances in your checking account to determine what you can expect to earn in interest.
Get a Checking Account That Works for You at First Alliance Credit Union
While interest accounts are tempting, you should be aware of what requirements you’ll need to meet to earn that interest. You’ll also want to be aware of any fees the financial institution charges, especially if you’ll be paying more in fees than you’ll be earning in interest.
It’s worth pointing out that if you’re a member of First Alliance Credit Union, you’ll earn interest on the money in your checking account if you have $1,000 or more in it. If you don’t, though, you’ll still be able to take advantage of a lot of great features, including no requirements on minimum balance and 24/7 access to your account, thanks to our robust online banking platform and mobile app.