Why you should open a high-yield checking account now
With interest rates high and inflation still humming along in the background, it can be difficult for savers to make ends meet. But while higher interest rates equate to higher borrowing costs, they also result in higher returns on vehicles like high-yield savings and certificates of deposit (CD) accounts. Interest rates on regular savings accounts are just 0.46% right now, on average while rates on high-yield savings and CD accounts are 5% or higher.
But it's not just high-yield savings and CD accounts that are generally worth opening now. There are also high-yield checking accounts that many would benefit from opening today. Below, we'll break down three big reasons why you should open a high-yield checking account in today's economic climate.
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Why you should open a high-yield checking account now
Here are three reasons why you should consider opening a high-yield checking account now.
Higher returns
The most compelling reason to open a high-yield checking account is in the name: the high yields savers can earn on their money. While they won't earn much (or anything) with their funds in a regular checking account, they can earn a significant APY simply by transferring their money into a high-yield checking account instead.
The interest rate varies based on the lender and the amount deposited, but it's not unusual to find rates competitive or in the same range as the top-earning CDs and savings accounts. So if you still need some funds readily available to pay bills — but would like to earn interest on those funds until those bills come due — a high-yield checking account could be good for you.
See how much you could be making with a high-yield checking account here.
Ease of use
High-yield checking accounts operate similarly to regular checking accounts, just at a higher rate. So you won't need to make any major changes to your banking approach in order to reap the rewards this type of account can offer. Just be sure to read the fine print before signing up as some accounts will require a minimum balance to be kept at all times. Without it, you could wind up getting penalized, thus eroding the benefit of the higher interest rate.
Interest rates could rise again
Bringing it full circle, while interest rates on high-yield checking accounts will always be higher than what a regular checking account can offer, they're especially high right now. Thanks to inflation and the Federal Reserve's attempts to temper it, rates on these accounts are attractive now and could even increase if the Fed moves rates upward again in the final months of 2023.
So, by opening a high-yield checking account now, savers will be able to earn today's higher rates immediately and be positioned to earn even more in the short term if rates tick up yet again.
Learn more about your high-yield checking account options here.
The bottom line
CDs, high-yield savings and high-yield checking accounts all offer favorable rates and terms for your banking needs right now. High-yield checking accounts, in particular, come with higher interest rates than almost all other checking accounts and they're simple to operate. Plus, with the potential for another interest rate hike to come this year, by opening one now, you'll be ready to take advantage of any additional rate boosts to come.
