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Best High Interest Online Checking Accounts

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Washington's EyeEvery few months, I like to take a look at our financial network map to update it and see if there are ways I can optimize what we are doing. The last few years, most of the focus was on reducing the number of accounts we had. It had bloated tremendously, as the proliferation of online banks (and my application and review of all of them) led to a ton of accounts, and optimization meant culling the herd.

Now that our map is leaner, one area I haven’t spent a lot of time on was the checking account portion. Until the last few years, checking accounts were pretty standard. You earned no interest, you had to kept a daily balance to avoid a fee, and the accounts were as utilitarian as you could get.

Here’s what I look for in a checking account (in priority order):

  • Accessibility: I want that bank to have ATMs and branches in the places I’m most likely to go. Or, in the absence of that, I want to be able to use widely available ATMs without paying a fee.
  • Rates: Checking accounts usually don’t bear interest, but I’m more likely to choose a checking account if the bank’s CD and savings rates are competitive.
  • Fees: None. I don’t want any fees, no minimum balance requirements, or any of those games.

Online checking accounts are winning the battle against the brick and mortar banks. Online checking accounts win in all the factors I just listed because they give you access to any bank’s ATM without fees (accessibility), they often do bear interest (rates), their savings accounts and CDs offer higher yields (rates), and they don’t charge you fees! It’s a win win.

Best High Interest Checking Accounts

The two checking accounts I now have are Ally Bank and ING Direct, in part because I have online savings accounts there. There’s nothing particular mind blowing what about they’re offering. I make deposits by putting signed checks in a prepaid envelope. I make withdrawals at any ATM and I get marginal interest income from the accounts.

As of May 29th, 2012, here are some rates of popular online checking accounts:

  • Ally Bank gives 0.75% APY on balances of $15k+ and 0.40% APY on <$15k.
  • ING Direct gives you 0.20% APY on balances below $50k, 0.85% APY on balances on $50k-$100k, and 0.90% APY on balances $100k+.
  • Everbank’s Interest Checking offers a 1st year APY of 0.83% for balances $25k-$49.9k.
  • Perkstreet Financial doesn’t offer interest on your checking account but they do offer 2% cash back on their debit card, which is better than what you’d get elsewhere.

These aren’t incredible rates but they’re is better than zero. And they charge no fees and require no minimum balance.

Brick & Mortar Can’t Compete

Bank of America’s MyAccess Checking requires an average balance of $1500/mo (or one direct deposit of $250+ each statement period) or you pay $12 each month. And it gives you 0.00% in interest. Almost any online bank that offers a checking account will have a better offer than Bank of America.

Online checking accounts are not perfect though – there’s no way for you to deposit cash. You can’t, and you shouldn’t, put cash in one of those deposit envelopes and drop it in the mail. The only way to do it is if you find a friend willing to write you a check, which you can deposit. It’s a minor headache, and I rarely deposit cash anyway, but it’s one worth being aware of.

Do you use an online checking account exclusively? If so, which one? If you have any lessons learned, we’d love to hear it!

(Photo: peasap)

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20 Responses to “Best High Interest Online Checking Accounts”

  1. Dean says:

    Jim,

    ING Direct just updated their smartphone app to accept deposits by smartphone. If you have an iPhone or Android, it works great.

    I’m not sure, but I may have heard that here on Bargaineering! ;-)

  2. Cole Brodine says:

    My Brick and Mortar local credit union currently pays 1% monthly on savings accounts with a minimum balance of $25 and 0.75% monthly on checking accounts with an average balance of $300.

    https://www.ne-fcu.org/current-rates/

    Hard to beat those interest rates.

    • Jim says:

      Those are pretty good rates, does your CU offer you use of other bank’s ATMs? (I’d guess yes, to a limited extent)

  3. ChimChim says:

    Check at Alliant Credit Union – I joined last week at 0.93% APY for high yield checking. I have been with PSECU (also a credit union) for over 10 years, but Alliant’s rates are unreal and beat Ally and others. I always preferred credit unions over banks.

    In order to join, you must meet certain criteria or donate $10 to a Foster Care charity…

    Cheers

    • Mark says:

      Yes, I did a ton of research before joining Alliant, and they are clearly the best. They’ve been paying leading rates for over three years now. The best things: strong rates for checking, saving, and HSAs. No need to open accounts at multiple banks, just do everything here.

  4. ChimChim says:

    As previously mentioned, I joined Alliant only 7 days ago but already their customer service is first class You can call them 24/7 and reach competent people. No one is paying .93% APY on both savings and checking accounts… I did see the rate dip today to .80%… but so what, both account pays the same rate with no mins.

    The only problem thus far is that you can only transfer $10K from other financial institutions for the first 30 days once opening an account. I joined so I can get the great rates, but I need to wait 23 more days before I can transfer $$$ in…

    If anyone can join a credit union over a bank, then do it…

  5. Matt says:

    I have linked ING savings and checking accounts and just transfer money from savings to checking when needed. The only problem is they only allow six withdrawals a month from savings.

  6. JamesV says:

    dollarsavingsdirect.com. 0.7% high yield savings rate. Has worked out well.

    • govenar says:

      Except that their rate has been below the top few banks consistently for years now, and they don’t let you use an external bank to do an ACH pull from them (only push from an external bank, or use initiate the transfer from dollarsavingsdirect, which then runs into limits on number of linked accounts, etc).

  7. CD says:

    I’m in the process of switching from BOA to Everbank for high interest checking and MM. EB guarantees top rates of return. They all fluctate over time.

  8. LD says:

    I’ve had a Perkstreet checking account for nearly a year and have no complaints. I like the perks and no fees. I can drop off my deposit at a UPS store and it’s overnighted to the deposit center. I just wish they had a savings account, which they’re apparently working on.

  9. I use ally checking/savings in conjunction with my local B&M bank. There are no fees and I still get the ultra-competitive online rates through ally. I just transfer my money whenver, wherever I need it.

    All my needs are covered and I don’t ever pay any fees for anything I want to do..

  10. mikestreb says:

    My checking account is paying 4.01% on balances upto $15,000. Have to jump through some hoops each month but it was stuff I was already doing. One problem is the nearest branch is 3 states away. I had my account before they put state residency restrictions on their accounts. Because the nearest branch is so far, I have an account at a local credit union that I cash checks at and then ACH transfer the money to the high yield account.

  11. Ben says:

    CapEd FCU in Idaho pays 3.1%


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