Pros & Cons of Interest Bearing Checking

With an interest bearing checking account, you can access your money when you need it.
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Money you have invested or in a savings account is working for you. That money earns interest or a return, even if it is only a small return. There is no reason the money you keep in a checking account should not also earn some interest. Interest bearing checking accounts let your money earn an annual percentage rate even though you have easy access to your money.

Earning Interest

The interest earned by a checking account is perhaps the biggest draw of opening the account. The money in the account stays liquid, meaning you can withdraw it as needed to pay your bills or other expenses. The money is also protected by the Federal Deposit Insurance Corp. up to $250,000 at the time of publication. Interest rates vary from bank to bank. Your checking account average daily balance may affect the account's interest rate.

Minimum Balances

Some interest bearing checking accounts require you to have at least a certain amount of money in the account. If your balance goes below the minimum, you may be charged a fee. The fee may be a one time fee or a monthly maintenance fee. You may also lose the interest if your account dips below the minimum balance amount. Some checking accounts have minimums that are prohibitively high for people with limited incomes.

Debit Card Requirements

In some cases, you may be expected to use a debit card attached to the checking account a certain number of times each month to avoid fees or to keep your interest rate. The account may require you to use a debit card at least five or 10 times each month. Depending on your buying habits, that may be easy to do or it may be challenging. While they require you to use a debit card, many banks charge you a fee if you use the card at another bank's ATM.

Lower or No Fees

Not all interest bearing accounts charge fees. There are a few, mostly online checking accounts, that skip the fees entirely. They do not charge monthly fees or fees to use outside ATMs. In some rare cases, a bank will not charge you a fee if you overdraw the account. You will have to do your research to find the banks with the lowest fees. Compare the fees charged to the interest earned to determine which is the best value.

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