What Is a High-Yield Checking Account?

By Jamie Cattanach · March 15, 2022 · 7 minute read

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What Is a High-Yield Checking Account?

A high-yield checking account can offer you a higher interest rate than other similar accounts, but it may come with certain conditions that require your attention. First, let’s acknowledge that a checking account is kind of like your financial home base. It’s where your paychecks are deposited and the account you use to pay bills and other day-to-day expenses.

In other words, it’s definitely a useful financial tool. But traditionally, money in a checking account doesn’t earn any interest — or maybe a nominal fraction of a percent.

Enter the high-yield checking account: It’s an option that turns your regular deposit account into a passive income machine. While it’s unlikely to make you rich, a high-yield checking account can help pad your pockets with a few extra interest dollars, which can add up over time.

Here’s what you need to know.

What Is a High-Yield Checking Account?

High-yield checking accounts, as their name implies, are checking accounts that offer a high “yield,” or interest rate, on the balance held in the account.

Whereas the national average for an interest-bearing checking account is about 0.3% APY per the FDIC, a high-yield account might offer 1% or even 4% APY — which still might not make you a fortune, but is a significant upgrade.

High-yield checking accounts make it possible to create a passive income stream, albeit a small one, just by holding money in your checking account (which you likely already do). In this way, a high-yield checking account can augment interest earnings — be they from investments like high-yield bonds or other types of banking products, like a high-interest savings account.

But if you’re wondering if there’s a catch, the answer is, Quite possibly.

Does a High-Yield Checking Account Come With Fees?

You’ve probably heard there’s no such thing as a free lunch, and when it comes to high-yield checking accounts, that adage holds true — although it might not necessarily actually cost cash out of your pocket.

Although some high-yield checking accounts come with monthly maintenance fees that could easily eclipse whatever interest you stand to earn, these fees can commonly be waived so long as you maintain a certain minimum monthly balance or meet other requirements. These may include making a certain number of debit card transactions or receiving a certain threshold in direct-deposit income each month.

These days, there are even some free high-yield checking accounts, usually offered through online banks — but the level of interest you’ll earn depends on your ability to meet the same kind of transaction minimums we just mentioned. (If you don’t meet the requirements, you might not earn any interest at all.)

So, in short, while you might not have to pay for your high-yield checking account, you’ll likely need to keep track of and ensure you perform the basic minimum monthly transaction requirements in order to glean the full benefits of the account.

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Pros of a High-Yield Checking Account

High-yield checking accounts can be very beneficial — here’s how.

More Earnings

These accounts offer an opportunity for interest earnings simply by holding a checking account

Motivation to Keep More in Your Account

These high-yield checking accounts can incentivize account holders to keep a higher minimum balance due to interest-earning requirements — which can offer a helpful cash cushion.


These accounts are becoming increasingly available, especially thanks to the proliferation of online-only banks.

Cons of a High-Yield Checking Account

On the other side of the coin (pun totally intended), high-yield checking accounts do have their drawbacks.

Transaction Requirements

These high-yield accounts may come with confusing transaction requirements to secure interest earnings. If the account holder doesn’t meet them, little or no interest will be earned.

Modest Interest (If We’re Honest)

Even the highest-yield checking accounts only offer about 4% APY. Yes, every little bit helps but this certainly isn’t enough money to grow wealthy on.

Additional Fees

In some cases, high-yield checking accounts may come with fees. Waiving them may require holding a significant minimum monthly balance — which can be challenging for individuals and families living paycheck to paycheck.

Let’s review the pros and cons again in a table:

Pros of High-Yield Checking Accounts

Cons of High-Yield Checking Accounts

Potential to earn interest on checking, which normally offers little or no earning potential May have many monthly transaction minimums to meet in order to qualify for interest earnings
Can incentivize account holders to keep more money in their accounts May have fees that can only be waived by maintaining a significant minimum monthly balance or meeting minimum transaction requirements
Are increasingly available — and increasingly fee-free — from online banks Even the best high-yield checking accounts offer far less than the average return on stocks and bonds (though when FDIC-insured, they can be a safer investment vehicle)

How to Qualify for High-Yield Checking Accounts

In order to qualify for a high-yield checking account — and actually get the benefits — you’ll need to be able to fulfill whatever that account specifies as far as transaction requirements or minimum opening deposits.

In addition, if your banking history is marked by overdrafts and other negative factors, this may be reported by ChexSystems, which is kind of like a credit score for banking. If you have many negative factors, you may not be able to qualify for a high-yield checking account — or other types of deposit accounts, either. (If your ChexSystems report contains errors, you can always dispute false information with ChexSystems online.)

How to Open a High-Yield Checking Account

Opening a high-yield checking account is similar to opening any other type of account. You’ll be asked to provide a variety of personal information, and to verify that information with official identification, proof of residence, and, in America, a Social Security Number or taxpayer identification number.

In addition, your chosen bank may also require a certain minimum opening deposit, which you’ll need to provide to activate the account. The bank will offer specific details as far as what documentation is required and how to deliver it.

The Takeaway

A high-yield checking account is a great way to augment whatever passive income you might earn from savings accounts, investments, and other holdings. Although the interest rates are usually relatively low, they’re a lot better than 0% — though you may need to meet some fairly complex monthly transaction requirements in order to secure your interest earnings. If you qualify for one of these accounts, it may be a good option. Every little bit of interest earned counts!

Smarter Banking With SoFi

Psst — looking for an opportunity to earn high yields on checking and savings at the same time? Open a bank account online with SoFi: we offer a competitive APY, and we have neat features that make your life easy, like a direct person-to-person transfer service and an easy option for adding a joint account holder.

Better banking is here with up to 4.20% APY on SoFi Checking and Savings.

3 Great Benefits of Direct Deposit

  1. It’s Faster
  2. As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.

  3. It’s Like Clockwork
  4. Whether your check comes the first Wednesday of the month or every other Friday, if you sign up for direct deposit, you know when the money will hit your account. This is especially helpful for scheduling the payment of regular bills. No more guessing when you’ll have sufficient funds.

  5. It’s Secure
  6. While checks can get lost in the mail — or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.


Is a high-yield checking account worth it?

This all depends on whether or not you can meet the minimum monthly transaction requirements. If you can fairly easily do so, a high-yield checking account is an easy way to earn passive income just by keeping an active bank account. But if you can’t, you might not earn any interest at all — or even pay additional fees for the account.

Is there a risk with high-yield checking accounts?

You may risk paying a monthly maintenance fee if you can’t meet the minimum requirements needed to waive it.

How do I open a high-yield checking account?

Opening a high-yield checking account is much like opening any other type of bank account. You’ll be asked for various documentation in order to verify your identity and residence. In addition, you may also need to make a certain minimum opening deposit.

Photo credit: iStock/MicroStockHub

SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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