Is a High Yield Checking Account Right for Me? - Genisys® Credit Union

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Is a High Yield Checking Account Right for Me?

on 6/19/2024

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Your checking account is like the worker bee of your financial accounts. It’s constantly active. Between paychecks coming in and funds from everyday purchases going out, it never rests. Having a checking account that is flexible is paramount.

However, as interest rates rise, many wonder if they should ditch their traditional checking accounts and move to High Yield options. Is it true you can earn more while still keeping your money accessible? In this blog, we’ll provide the information you need to determine if a High Yield checking account is right for you.

What is a High Yield Checking Account?

Generally, checking accounts earn very little to no interest. Their primary goal is to provide convenient access to your money for everyday financial needs. High Yield checking accounts function the same as their traditional counterparts, but they can earn substantially more money in interest or dividends. 

While these accounts are beneficial, they often have limitations or restrictions. Understanding the pros and cons of High Yield checking accounts is essential before making your decision. 

What are the Advantages of High Yield Checking Accounts?

High Yield checking accounts aim to bridge the gap between functionality and earning potential. You keep the convenience of a normal checking account while adding the ability to earn substantial returns on your money. 

Higher Yields: These checking accounts often offer yields that outpace other investment options, such as savings or money market accounts

Convenient Access: High Yield checking accounts function like other checking accounts and offer all the features you expect, like debit cards, digital banking, and direct deposit.

No Minimum Balance: While some High Yield checking accounts might have a minimum balance - Genisys’ High Yield Checking Account does not - it’s usually much lower than other investment options. For example, Share Certificate Accounts or Certificates of Deposit often require a minimum amount of $500 or more to open the account.

Federally Insured: Like other accounts at the credit union, High Yield checking accounts are also federally insured by the National Credit Union Administration (NCUA) up to at least $250,000.

Are There Drawbacks to High Yield Checking Accounts?

While High Yield checking accounts do require account holders to meet certain qualifications, many would argue they are not drawbacks. In fact, most will find they already meet the requirements without doing anything extra. These accounts are a win-win for both you and your financial institution. You earn more money while your financial institution can build a deeper relationship with you. In the long run, everyone wins. 

While the qualifications are unique to each financial institution, they typically fall into the following categories:

Balance Requirements: You might find that your institution requires you to maintain a minimum balance throughout the qualification period.

Add-On Services: You’ll often be required to enroll in eStatements or maintain an active direct deposit with your financial institution. 

Set Transactions: Most High Yield checking accounts require you to make a minimum number of transactions per qualifying period. This step is to ensure you’re using the account as an actual checking account and not only as a savings account. 

The one downside of these accounts is that they typically have a maximum earning potential. For example, you earn 4% APY throughout the qualifying period on the first $10,000 you deposit. Anything over $10,000 will receive the same rate as traditional checking accounts. 

Again, this ensures people aren’t abusing the account and only using it as a savings option. Most people have no issue with the maximum amount because money is constantly going in and out of their checking account – meaning it’s unlikely to have a large amount of cash sitting idle for long anyway.

Who Will Benefit from a High Yield Checking Account?

Anyone can benefit from a High Yield checking account. You still have the flexibility of your traditional checking account, but now you can earn money at the same time. If you can meet the qualifications, you’re sure to benefit. 

Here are a few other instances where these accounts shine:

Higher Balances: If you prefer to keep higher balances in your checking account to ensure you have money for bills (especially if utilizing autopay), a High Yield checking account will benefit you. 

Money Market Alternative: Money market accounts are ideal for those looking to earn more while keeping their money liquid. If you save money in a money market and transfer it to your checking account as needed, a High Yield checking account provides the best of both accounts.

Existing Relationship: If you already have a substantial relationship with your financial institution and easily meet the qualifications, there’s no reason not to switch. 

Your checking account is likely your most active financial account. So, you want to ensure you have access to all the features and perks you need and deserve. If you have questions about High Yield checking accounts or the qualifications, we’re ready to help. And if you’re ready to upgrade your checking account to Genius High Yield Checking, get started here


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