Best Interest Checking Accounts

A few years ago, I wrote a post about who offers the best deal in both the checking and savings accounts. Back then, 5+% yield on savings accounts and 3+% on interest checking accounts were very common. Now, we know things are totally different. With the Fed fund rates being held at close to zero for more than a year, you are lucky if your savings account pays 1.50% APY. From where we are now, it could take years for yields of online savings accounts to go back to where they were three years ago.

Best Interest Checking Accounts

Though I have been chasing rates for quite a long time, with nearly a dozen savings accounts opened and closed in the past 5 years, I have never been a fan of interest checking accounts because I don’t see much use of it. I usually keep only a small amount in checking account with Bank of America by moving most of the money coming into the account to high-yield savings accounts, such as EverBank, so I can earn a better return. Most interest checking accounts, on the other hand, employ a tiered rate structure which usually pays interest rates that are close to zero (0.50% or less) for the balance of only a few thousand dollars. Besides, even with a high balance, the next tier of interest rate is still usually lower than the rate for saving account from the same bank. You can’t really get much from an interest checking account, in my opinion. That said, I did open an Ally Bank Interest Checking Account recently. But I am not going after the interest. I only want to have their debit card so I can withdraw cash from any ATM without paying any fee.

If you’d like to have both checking and savings account with the same bank, here are some online banks that offer high-yield savings account (well, some aren’t really that “high” yield) as well as interest checking account, with good interest rates and additional perks.

EverBank FreeNet Checking Account

EverBank has been quite aggressive in attracting new customers with its 2.01% bonus rate for its Yield-Pledge Money Market Account ($1,500 minimum to open account, $5,000 balance to avoid $8.95 monthly fee). I would love to put all my money in that bank if the rate were good more than the three-month introduction period. EverBank FreeNet Checking Account offers

  • 2.01% 3-month bonus rate (current rate 0.61% APY for balance less than $10,000)
  • FDIC insurance
  • No monthly fee
  • $1,500 minimum initial deposit to open an account
  • Free online bill pay for monthly balance at least $5,000 (otherwise $8.95 monthly fee)
  • Unlimited ATM fee reimbursement for monthly balance of $5,000 or more

FNBO Direct Billpay Account

FNBO Direct used to have a very attractive Online Savings Account. However, with 1.10%  APY, the savings account rate is hardly competitive, almost at the same level as ING Direct. But its Billpay account does look good. With FNBO Direct Billpay Account, you will get

  • 1.10% APY, the same rate as the savings account
  • FDIC insurance
  • $1 minimum to open an account, no monthly fee
  • Free Visa check card
  • Four fee-free withdrawals per month from non-network ATMs with monthly balance of $25,000 or more
  • Free online bill pay
  • POPMoney service (send money to other people directly from FNBO account) at $2 fee for standard delivery

Ally Interest Checking Account

This is the account that I opened the other day. As I mentioned above, I am only interested in the No Fee ATM part of this account, but the Ally Interest Checking Account does have other features

  • 0.50% APY for balance up to $15,000; 1.05% APY for balance above;
  • FDIC insurance
  • No account minimum and no monthly fee
  • Free online banking and bill pay
  • Free debit card, checks and unlimited check writing
  • Free overdraft service

Of course, by now you should be familiar with Ally Bank Online Savings Account which has an yield of 1.09%.

ING Electric Orange Checking Account

ING Direct is one of the first banks to offer both savings and interest checking account. It’s ING Electric Orange Checking Account offers

  • 0.25% APY for balance from $0 to $50,000 and 1.10% APY for balance of $50K or more
  • No minimum, no monthly fee
  • FDIC insurance
  • Free online bill pay and free MasterCard debit card
  • Free ATM withdrawal from Allpoint network ATMs
  • P2P payment (send money directly to a person)

ING Direct Orange Savings Account now has an yield of 1.10% APY.

HSBC Online Payment Account

Used to be HSBC Direct, the new HSBC Advance is very much like ING Direct, in terms of rates. The HSBC Online Payment Account is another interest checking account that offers one single rate for any balance. You will get

  • 0.80% APY
  • FDIC insurance
  • $1 to open an account and earn interest
  • Free debit card
  • No monthly fee
  • Free bill pay and free debit card

Like all other banks listed above, HSBC Advance also has an Online Savings Account. The current rate is 0.90% APY.

So as you can see, there isn’t really ONE best interest checking account that gives you everything. Some (Ally) has good rate, but only for very high balance; some (HSBC) offers a single rate regardless of balance, but the rate is rather low for high balance compared with other banks; some (Ally) offers free ATM, but you need a large balance to enjoy a good rate at the same time; some (FNBO) does have a good single rate, but then you don’t have free ATM all the time. Then you also have the bank (ING) that pays a ridiculously rate and limited free ATM, but doesn’t require anything to open an account and bank (EverBank) that requires high initial deposit and let you got to enjoy free ATM with even higher balance, but with a good rate for only a limited time.

What’s your choice?

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6 Responses to “Best Interest Checking Accounts”

  1. Jenna |  Mar 04, 2010 at 3:18 pm

    High yield checking accounts can be a good option but, believe it or not, they’re not the best option for everyone. Unless you park a lot of money in your checking account, you may actually make more with an account that gives you cash back rewards for what you spend.

    Look for an account that gives you 1% cash back.

    Jennifer Walker

    • Sun |  Mar 05, 2010 at 7:22 pm

      Generally, I don’t think interest checking accounts are attractive because of the reasons I mentioned in the post. But 1% cash back isn’t much better either since that is the rewards that you get for the amount of money you spend. If you spend more, you will get more, which means you will also to have a large amount of money in the account. Then in this case, the return you will get is less than 1%.

  2. Jenna |  Mar 08, 2010 at 12:58 pm

    I definately appreciate your response but what you articulated regarding a return less than 1% is not actually true. It is very possible to deposit money into your checking account and spend down that money in which case your average balance would remain low even though you are spending quite a bit. If, in fact, someone wanted to park their money in a high yield savings account because they do have a high balance, they may still want to consider spending their money with PerkStreet.

    Here is a link to an article that provides an example of what I am referring to.

    Jenna Walker
    PerkStreet Financial

    • Sun |  Mar 08, 2010 at 9:44 pm

      I don’t see how you can get more than 1% with PerkStreet. And I will definitely not consider PerkStreet if I have a high balance, whether there’s a $50 or $100 bonus or not. It’s just not the product for me.

  3. Larry |  Mar 15, 2010 at 2:54 am

    Have you looked at American Bank? They offer an e-checking account for 1.25% APY, similar to FBNO. The catch is you need to open with $100, and maintain $1K to avoid fees. But you do get free-ATM/ATM reimbursements and check writing.

    Been a customer of theirs for several, several years and pretty happy with their service and their rates which are consistently one of the highest out there.

  4. vast anthology |  Aug 19, 2010 at 7:21 pm

    Awesome! Posted earlier on a more recent post, but found what I’m looking for :) Found your site via a google search looking for Ally Bank reviews– looking at starting up the interest checking and a CD ladder. Looking forward to NO ATM FEES! Always in a pinch and hate paying the fee.