Do checking accounts earn interest?

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In a Nutshell

Not all checking accounts earn interest, but some do. Interest checking accounts can help you earn some extra money, but they may come with fees or other requirements, and the APY might not be as high as with a savings account.
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Your checking account is usually the account you use for things like depositing paychecks and paying bills. But it could also be a way to help you earn a little extra money.

Some checking accounts pay you interest for the money you keep in your account, and may even give you bonuses for things like adding a direct deposit or making certain qualifying purchases.

The downside is that interest checking accounts typically don’t offer as much potential interest as traditional savings accounts. Interest checking accounts may also come with additional fees and requirements, such as maintaining a minimum balance.

Read on for more on what to look for in an interest checking account, and whether one might be right for you.



Do checking accounts earn interest?

A checking account can be a good place for you to keep your money until you’re ready to spend it. Some banks also pay interest on money in checking accounts, meaning your money works for you while it’s in the account.

Some interest checking accounts have requirements, like a minimum checking account balance, to qualify for interest payouts.

Interest-bearing checking accounts offer an annual percentage yield, or APY, which refers to the amount of interest paid during the year, plus compounded interest over the year. The interest you earn is based on the account’s APY and how much money you have on deposit. Interest is paid out periodically, usually every month.

As of June 2022, the national average rate for an interest-earning checking account with $2,500 at a bank or credit union was 0.07%, according to data from S&P Global Market Intelligence.

What to consider when opening an interest checking account

If you want to open an interest checking account, be sure to shop around and compare what different banks and financial institutions are offering. Here are some things to look for.

  • Interest rates, rewards and bonuses.
  • Minimum balance requirements and other restrictions, and fees like monthly maintenance fees and potential charges like overdraft fees.
  • How interest is calculated and how often interest is paid.

What’s the difference between a checking and savings account?

One of the main differences between a checking account and a savings account is how accessible your money is. With a checking account, you can pay bills or make other everyday purchases via check, debit card, online bill-pay or cash withdrawn from an ATM.

A savings account is usually for money you want to set aside for emergencies or a specific goal, like a car down payment or home down payment.

You can access your money from a savings account or a checking account. But you may find it easier to pay for things from a checking account, which can give you several ways to tap your money. A savings account, on the other hand, may limit the number of withdrawals you can make each month.

While some checking accounts earn interest, savings accounts often offer higher annual percentage yields as extra incentive to keep money in your account.


What’s next?

An interest-earning checking account is one way to earn at least a little extra on your money, especially if you tend to keep a large sum in your account. But the interest rates tend to be lower than for traditional savings accounts, and they may come with extra requirements or fees.

If growing your savings is the goal, you might want to look into other interest-bearing accounts instead, like a traditional or high-yield savings account, a money market account or a certificate of deposit. These often offer higher interest rates, though they may give you less flexibility than an interest checking account.


About the author: Sarah Sidlow is a freelance writer and editor based near Detroit. She has a master’s degree in journalism from Georgetown University. Sarah’s work has appeared in Luxembourg’s national newspaper, Washington City Paper… Read more.