- High-yield checking accounts give you easy access to your money for daily spending.
- High-yield savings accounts are for short-term goals and emergencies.
- Interest rates are higher than on typical bank accounts, but you might need to maintain a minimum balance.
If you're looking to earn a higher interest rate than the average bank account, your best bet will likely be through online banks and online banking platforms.
To keep your money safe but growing, you can open a high-yield savings account or a high-yield checking account — or both. Here are the main differences between the two and when to consider each.
What are high-yield accounts?
A high-yield checking account functions similarly to a regular checking account, but your balance earns interest over time. You'll usually have a debit card attached to the account to make purchases or withdraw money at an ATM.
A high-yield savings account also earns interest, but it's often used to store cash for short-term savings goals or emergencies rather than daily spending and therefore doesn't come with a debit card for easy access to your cash.
To earn interest in a high-yield account, you may need to meet specific requirements. For instance, some high-yield accounts only earn interest if you maintain a minimum balance or make a certain number of monthly transactions.
High-yield account interest rates
Banks sometimes offer higher interest rates on savings accounts than checking accounts, but they're usually comparable.
The top high-yield savings and checking accounts offered an annual percentage yield (APY) of 5% or greater as of April 2024. That's more than 10 times the average interest rate on traditional savings accounts, according to FDIC data. Most traditional checking accounts earn less than 0.01%.
Nathan Moore, CFP®, president and principal with Agape Planning Partners, says earning interest on your money is vital because of inflation.
"With inflation being as high as it is, we see too many people that have their money sitting in cash, and they're not earning any interest on it at all. They're effectively losing buying power every day because as the cost of bread goes up — if your dollar is worth the same — you can't buy the bread tomorrow," says Moore.
High-yield account fees and requirements
Some banks offer multiple rate tiers rather than a flat interest rate on high-yield savings accounts. Typically the higher your balance, the greater your APY. But some banks flip the script and offer a high rate on your first $500 to $1,000, for example, and a lower rate on the rest of your balance.
High-yield checking accounts often come with requirements to maintain a minimum balance or meet a minimum number of monthly transactions in order to unlock the highest APY tier or waive the monthly bank maintenance fee.
There may be more fees associated with a high-yield checking account than a high-yield savings account, especially if you have debit card access that allows you to make purchases and make withdrawals from ATMs. Pay attention to out-of-network ATM fees, overdraft fees, and other common bank fees. These charges can outweigh the benefits of a high interest rate.
Pros and cons of high-yield checking accounts
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Pros and cons of high-yield savings accounts
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Choosing between high-yield savings vs. high-yield checking
Moore says high-yield checking accounts are practical if you maintain a high average balance regularly. You can use your account's debit card or paper checks to pay bills, and then earn a high interest rate by meeting the account's requirements.
People can distinguish between high-yield checking accounts by looking for useful banking features related to money management. For example, some high-yield checking accounts may offer early direct deposit or a nationwide ATM network.
High-yield savings accounts are tools for storing and saving money you don't need on a daily basis. As a result, they aren't as easy to access as high-yield checking accounts. Most won't come with a debit card, which means you might not be able to deposit or withdraw cash. Instead, you'll have to transfer money to and from another bank account.
That barrier may be beneficial if you struggle to keep money in savings, Moore says. "The reason for that is you can't just walk in and take the money out. You're more disciplined to keep it there," he says.
High-yield account FAQs
High-yield checking accounts should hold money you need for daily or monthly expenses, while high-yield savings accounts should store money for non-immediate financial goals or emergencies.
Evaluate the features of a high-yield checking account the same way you would a regular checking account. Be sure you can access your money easily and quickly, and that you won't be charged unnecessary fees. The ability to earn interest is a bonus.
You may have limited access to funds in a high-yield savings account. Though the Federal Reserve has stopped limiting savings account withdrawals to six per month, some banks still enforce the rule.
Consider how often you need to access your money. If you prefer a debit card to electronic transfers, a checking account would be better. If you don't need to access your funds for bills or daily spending, a savings account may be better.
Some high-yield accounts may require a minimum balance to avoid fees or to earn a higher interest rate, but there are plenty of fee-free accounts offered by online banks to consider.
