High-Rate Checking Account | Alliant Credit Union (2024)

FAQs

What is a high-rate checking account? ›

A high-rate checking account pays you a dividend, while a regular checking account does not. Most banks require very high balances to pay you a respectable dividend – sometimes as much as $15,000.

Pros. Member-owned: Because members share ownership in credit unions, they have a greater say in operations than bank customers. This often leads to superior customer service. Lower fees: Because credit unions are not-for-profit, they typically charge lower fees than banks.

Checking accounts don't typically pay much interest to accountholders, if at all. Because of this, keeping more money than needed in a checking account may not make sense. Instead, those excess funds could be put into a savings account with a higher annual percentage yield (APY).

A common rule of thumb for how much to keep in checking is one to two months' worth of expenses. If your monthly expenses are $4,000, for instance, you'd want to keep $8,000 in checking. Keeping one to two months' of expenses in checking can help you to stay ahead of monthly bills.

Cons of a High-Yield Checking Account

Excessive balance requirements may prevent you from earning much interest. Low account activity may diminish earned interest or cancel the account. Only offered by specific financial institutions. Fees may apply to accounts with few transactions or insufficient average balances.

High-yield savings accounts are an excellent choice for building an emergency fund. They provide a safe place to store cash you might need readily available for unexpected expenses. Keeping three to six months' worth of living expenses in a high-yield account is a common guideline. Short-term goals.

Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass. May offer fewer products and services.

Credit unions can be ideal for a low-interest loan, lower mortgage closing costs, or reduced fees, but you'll need to qualify for membership. Larger banks may offer you more choices regarding products, apps, and international or commercial products and services, and anyone can join.

Joining a credit union won't help build your credit score on its own, but it can be a good first step toward building your credit. Here are a few other ways that you can build your credit score: Use a credit card cosigner to increase your approval odds. Apply for a secured credit card, which requires making a deposit.

Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

Why you shouldn't keep a lot of money in checking account? ›

Risks of Keeping Too Much Money in Your Checking Account

One reason is that it isn't going to earn you much interest. The national average for interest-bearing checking accounts is 0.07% APY. Compare that to a high-yield savings account that can earn as high as 5.00% APY or more.

How much is too much cash in savings? An amount exceeding $250,000 could be considered too much cash to have in a savings account. That's because $250,000 is the limit for standard deposit insurance coverage per depositor, per FDIC-insured bank, per ownership category.

So, regardless of any other factors, you generally shouldn't keep more than $250,000 in any insured deposit account.

The general rule of thumb is to try to have one or two months' of living expenses in it at all times. Some experts recommend adding 30 percent to this number as an extra cushion.

Many people store money in a savings account, but some accounts offer a much higher return than others. That's where high-yield savings accounts (HYSAs) come in. While the average return on a traditional savings account is just 0.46%, some HYSAs offer rates over 5%.

Whether the interest earned from a high-yield checking account is worth it depends on your money habits. This type of bank account makes sense if you generally carry a high checking account balance or meet other requirements qualifying you to earn interest on the account.

The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. Deposits held in different ownership categories are separately insured, up to at least $250,000, even if held at the same bank.

Interest checking accounts pay interest on your balance while offering the flexibility to deposit, withdraw, spend and send money freely. According to national FDIC data from June 17, 2024, the average checking account interest rate is 0.08%.