High-yield checking: How it can pay you back

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This content is sponsored by PenFed Credit Union, federally insured by NCUA.

Checking accounts allow you to have quick access to your money for things like bills, entertainment, expenses and other costs associated with daily life. However, you can optimize your checking account even further and increase interest through a high-yield checking account.

High-yield checking accounts are interest-earning bank accounts designed for regular use. These accounts function essentially the same as standard checking accounts except they offer higher APYs, which means they earn more than regular checking accounts, according to Business Insider.

Checking accounts are generally used for everyday spending. There are different types of checking accounts, such as free checking accounts or high-yield checking accounts that can lead to differing dividends earned.

“A high-yield checking account, which some banks may call a reward account, allows you to earn interest on your checking balance,” Jay Zigmont — a CFP® professional and founder of registered investment advisory company, Live, Learn, Plan — told Business Insider. “These accounts still have a debit card and allow for check writing. Depending on the bank, there might be a variety of conditions that need to be met in order to qualify. For example, they might require a minimum balance, a number of transactions, direct deposit of your paycheck, or for you to have other accounts with it.”

PenFed Credit Union’s Access America Checking is a high-yield checking option that makes the most of your money, which helps pay you back. With Access America, you can earn a high APY and get up to five times the national average on your checking account balance with monthly direct deposits of $500 or more.

The $10 monthly fee associated with the Access America Checking account can easily be avoided: by either setting up a monthly direct deposit of $500 or more or maintaining a daily balance of $500 or more, PenFed said.

High-yield checking accounts are similar to high-yield savings accounts – both allow you to earn money on the balanced banked in the account. However, there are differences on qualifying requirements and how often you can access the funds, according to Business Insider.

“​​A high-yield savings account tends to have a higher interest rate than a checking account, but the intent of the account is to keep your money in it for a period of time versus regularly writing checks or doing debit card transactions,” Zigmont said to the Business Insider. “Some savings accounts may have a limit in the number of transactions per month before you get hit with a fee.”

So which is the right option for you?

A high-yield checking account may be a good choice for you if you know you can maintain a solid balance, meet the transaction requirements and plan to use the account regularly, according to Business Insider.

“High-yield checking accounts are best suited for individuals who carry a large balance in their checking accounts but make regular payments out of the account and have a need for checks,” Brian Stivers, investment advisor and founder of Stivers Financial Services, told Business Insider.

“Since many of the high-yield savings accounts that are paying the best rates also require you to utilize their branded credit card and charge a certain amount monthly, this is best for people who use credit cards regularly and pay them in full each month to avoid interest payments.”

When you use PenFed’s Access America Checking, you can set up direct deposits and get your paycheck up to two days early.

“When we receive your direct deposit information from your employer, we make your pay available to you up to two days early,” PenFed Credit Union said.

This early access to your paycheck can help you keep up with bills and avoid late fees that can pop up around the time you receive your salary. This also helps you avoid costly paycheck advance services, US News & World Report noted.

Early direct deposit has an additional benefit of allowing customers to earn interest on the money sooner.

“If your cash flow is not tight, getting paid early could mean earning interest for a couple days longer,”  Brian Walsh, certified financial planner and senior manager of financial planning at SoFi, told US News & World Report.

Read more about Access America Checking on PenFed Credit Union’s website. PenFed Credit Union is federally insured by NCUA.

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