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h yield checking accounts are an excellent option for turning the money you use every day into an actual investment. You're probably accustomed to using normal checking accounts. This article will explain the benefits and challenges of rewards checking.
The rate of return is usually much larger than the interest rate attached to a typical savings account. These accounts are just another reason why it's smart to keep using personal checks.
Of course, there's always a catch. You will have to jump through some hoops to make sure that the interest you are paid on the balance in your account each month isn't lowered dramatically.
Banks and credit unions offer high-yield checking accounts (also known as rewards checking accounts) with interest rates from anywhere between .75 percent to more than six percent. Occasionally [link widoczny dla zalogowanych], rewards checking accounts are only offered to local customers. But many financial institutions will also offer accounts to people who live outside of the state.
Being required to have direct deposit or use online banking through that financial institution is a common guideline. You may also have to make a certain number of debit transactions each month. In fact [link widoczny dla zalogowanych], Bankrate.com conducted a survey of banks that offer high-yield checking accounts and discovered more than 90% require users to use either direct deposit or online bill pay to qualify for the top interest rate.
If you fail to meet guidelines and standards set up by the bank or credit union holding your rewards checking account, your rate of return could be lowered to as low as .04%.
It's a smart idea to keep a larger balance in your high yield checking account. Obviously it offers that means a higher return than an everyday checking account. Just remember that most banks have a balance cap limiting the amount you can ear interest on.
Most of these financial institutions have a certain dollar amount where limit on paying interest begin. For most accounts it is common to have a balance cap of around $25,000. However, many of the banks that offer a very high interest rate also slap you with a very low balance cap. Bankrate.com features a credit union offering an interest rate of 6.17% [link widoczny dla zalogowanych], although it sets a balance cap of $500.
Experts say you should look at your high-yield checking account as a place to store your savings, not a place to use for lots of spending. They suggest using the account to make common low-cost transactions such as filling up your gas tank, or buying a few groceries. Avoid using the funds in that account for buying costly items like a new vehicle or expensive stereo equipment. You see how that would only decrease the funds in your checking account earning you less in return.
Reward checking can also be more profitable for financial institutions. Customer are more likely to stay with the bank and will keep a higher balance in their account.
Don't forget to examine every detail of your high-yield checking account ahead of making any permanent choices. Each financial institution has a different set of restrictions and loopholes.
You can also save money when you order checks online.