High-interest checking accounts work similarly to a standard checking account but with the ability to earn interest. You can deposit and withdraw money and are given a debit card. You then earn interest based on your balance.
Earning interest means the bank takes a percentage of your balance and pays you that amount. To be considered a “high-interest” checking account, this percentage (APY) is above average. According to the Federal Deposit Insurance Corporation (FDIC), the average checking interest rate is currently 0.07%.1
Each bank or credit union will set its own checking account interest rates. This may vary based on the account. Some banks will also give you a higher APY for larger balances. For example, you may earn 0.01% interest on a balance of up to $10,000, but 0.02% on a balance over $100,000.
Other names for high-interest checking accounts
Depending on the financial institution, you may find alternative terms for high-interest checking accounts. For instance, some accounts are called high-yield checking accounts, high-rate checking accounts, or rewards checking accounts.
These terms are generally interchangeable — they can all refer to a checking account that offers a higher interest rate than a standard checking account. Rewards checking accounts may have other perks, like cash-back rewards on a debit card or reimbursement for out-of-network ATM fees.
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