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Interest-bearing checking accounts pay interest on your balance while giving you the flexibility to deposit, withdraw, spend, and transfer at will. According to national FDIC data as of June 17, 2024, the average interest rate on a checking account is 0.08%. This means that a $10,000 deposit left for a year would earn you $7 in profits.
What is the average interest rate on a checking account?
What is a good interest rate for a checking account?
The right interest rate for your checking account will depend on the current interest rate environment. Generally, a competitive interest rate will be several times higher than the national average. Given that the national average interest rate for checking accounts is very low, this is not a hurdle to clear.
High-yield checking accounts offer more competitive interest rates than traditional checking accounts, often well above the national average by as much as 10 times. Currently, checking account interest rates are considered competitive at around 1.00% annual interest, but high-yield checking accounts can earn you 3.00% annual interest or more. Keep in mind, however, that checking account interest rates are variable and subject to change.
How to Find the Highest Current Account Interest Rates
Competitive checking accounts are available if you know where to look. Here are some strategies to help you find the best checking account interest rates and compare accounts to identify the one that best suits your financial habits and needs.
Compare multiple financial institutions. Don't limit your search to the big banks. Interest-bearing checking accounts from online banks and credit unions tend to have the highest yields. Compare several FDIC-insured banks and NCUA-insured credit unions to find the best interest rate. Check the requirements to earn interest. Interest-bearing checking accounts may require you to maintain a certain balance, receive a certain amount in monthly eligible direct deposit transfers, or meet other conditions to earn the highest interest. Pay attention to minimums and maximums. Find out how much money you need to keep in the account. Many of the best interest-bearing checking accounts have low or no minimum deposit or balance requirements. Also, pay attention to maximum balance limits. Some accounts only pay the highest interest rate on balances below a certain threshold. Pay attention to fees. Monthly maintenance fees, transfer fees, check fees, and foreign exchange fees can all reduce your checking account interest income. There are plenty of free interest-bearing checking accounts, so you won't be locked into high fees.
Should I open a checking account?
If you don't already have a current account, consider opening one to use for everyday payments, deposits, and transfers. Having a flexible transaction account that you use regularly is important to keep your money safe and organized.
If you need a place to store money for expenses and get your paycheck, you should open a checking account. If you want to earn interest on the portion of your balance that you're not ready to spend yet, you should open an interest-bearing checking account.
If you're looking for the best possible interest rate, consider other interest-bearing savings accounts.
Other options for high interest accounts
Typically, interest-bearing checking accounts offer rates that are much lower than those offered by savings accounts, money market accounts, and CDs. If you're looking for a higher yield than a checking account can offer, check out other high-interest accounts offered by many banks and credit unions.
High Yield Savings Account
Compared to checking accounts, standard savings accounts generally offer higher yields. According to FDIC data, as of September 2023, the average savings account has a yield of 0.45%. However, high-yield savings accounts can offer 10 times more than that rate. As with high-yield checking accounts, the best high-yield savings accounts are often found at online banks and credit unions. Many have no minimum deposit or balance requirements and offer convenient features to automate and organize your savings.
Savings accounts have more restrictions than checking accounts and often limit the number of transactions you can make each month, so consider a high-yield savings account for money you don't need to access regularly.
Money Market Accounts
Money market accounts (MMAs) are something of a cross between savings and checking accounts. They combine competitive interest rates with spending flexibility and often offer convenient withdrawal methods, such as a debit card, ATM card, or checkbook. The current national average interest rate for money market accounts is 0.65%, according to FDIC data from September 2023. Top-rated MMAs often earn interest rates close to or higher than those of top-rated savings accounts.
In exchange for the higher yield, money market accounts usually require a higher balance than savings or checking accounts and may also have higher monthly fees. MMAs are a great choice for high savings balances that you want to withdraw quickly.
Certificates of Deposit (CDs)
A Certificate of Deposit (CD) is a fixed-term savings account that offers a fixed, guaranteed interest rate. You put your money in the CD for a set period of time (usually one month to ten years) and don't touch the money until the end of that period. You earn the same interest rate throughout the entire period. If you withdraw your CD funds early, you will most likely be charged an early withdrawal fee.
CD interest rates are often higher than those offered by other savings accounts. For example, the average interest rate for a 12-month CD is 1.76%, and the average interest rate for a five-year CD is 1.38%, according to the most recent data from the FDIC. Because CDs can be difficult and costly to access, they're a great place to park money you're sure to save; they're not a replacement for a checking account.