Interest-bearing checking accounts should be looked at in two groups: one for traditional brick-and-mortar banks, where rates average around 0.04% APY, and another for online-only banks, whose lower operating costs often allow them to provide checking account rates of 1.00% or more. The specific checking account rate you'll get at each bank can change depending on several factors, such as minimum balance, account type and monthly activity.
- Average Checking Account Rates at Brick-and-Mortar Banks
- Average Online Checking Interest Rates
- How to Shop for Checking Account Rates
Average Checking Account Rates at Brick-and-Mortar Banks
Since 2009, the FDIC has published the weekly average for interest rates for different types of deposit accounts. The average for interest checking accounts at the $2,500 balance level has dropped consistently since data collection began. The graph below includes interest checking options at all banks receiving deposit insurance coverage from the FDIC —a group that includes nearly every bank in the U.S.
For a more useful view of checking account interest rates, we looked at standard banks and online banks in separate groups, then took the APY of each bank's most affordable interest checking account. We've also included the minimum balance required to earn the rates and to avoid any maintenance fees, which can easily wipe out all of the interest earned in a month.
|Bank||Checking APY||Minimum Balance|
|Bank of America||0.01%||$5,000|
For the most part, traditional banks offer very low interest rates regardless of your checking account balance. Of these, the strongest performers in interest checking are Capital One and Huntington Bank. A number of other banks grant small rate increases if you open a premium account, but the gain is rarely worth the higher minimums you'll need to meet in order to avoid maintenance fees. We found several examples of the way banks set their rates on different account tiers.
Capital One: High Yield Checking can earn 0.20% APY on any balance, but customers are required to keep at least $5,000 in the bank or else have the bank close the account.
Huntington Bank: The Huntington 5 Checking account earns 0.15% APY on any amount, with $5,000 required to avoid fees. Customers with bigger balances can opt for the Huntington 25 Checking account, earning 0.25% APY and waiving the monthly fee with at least $25,000.
KeyBank: Key Privilege Checking rates can earn 0.05% APY, while Key Privilege Select offers 0.15% APY. However, keeping these accounts fee-free requires $25,000 and $100,000 respectively.
TD Bank: TD Relationship Checking must be opened together with one of the bank's savings accounts, and earns 0.03% APY on any balance. You will need at least $20,000 to avoid the $25 monthly fee.
Average Online Checking Interest Rates
Online banks don't have any physical locations for you to visit, but they provide FDIC-insured checking account services that you can access online or with your smartphone. They tend to spend far less in operating costs than standard banks, which allows them to provide better interest rates to consumers and do away with a lot of the usual account fees.
|Bank||Checking APY||APY Minimum Balance|
|Capital One 360||0.20%||$0|
Online rates tend to vary more widely than rates at brick-and-mortar banks, so it shouldn't come as a surprise if you find additional online banks with significantly different APYs. It's also important to consider the additional activity requirements for earning the full APY on certain checking accounts. Common rules include meeting a monthly direct deposit minimum and using your debit card for a certain number of transactions. Failing to meet these requirements can drastically lower your interest rate for the month, so it's important to consider whether a given account will fit into your usual habits.
Axos Rewards Checking: 1.25% APY for each month you make $1,000 in direct deposits and 15 debit transactions of at least $3 each.
MemoryBank: 1.50% APY when you make one direct deposit of any amount, five debit card transactions and sign up for online paperless statements.
How to Shop for Checking Account Rates
Looking at APY is one of the most useful ways to compare different checking account rates. Most banks will list both the interest rate and the Annual Percentage Yield for their accounts, but only APY offers an apples-to-apples comparison of offers at competing banks. This is because APY accounts for the effect of compounding interest, which doesn't work the same way at every institution. Many online banks, for example, compound your balance daily and pay out that interest monthly, while other banks compound on a monthly or quarterly basis. APY is a convenient yardstick for measuring accounts that compound at different intervals.
In general, shopping for checking account rates online will show you that the highest rates always belong to online-only banks. However, this doesn't always mean that online banks are automatically the best choice for you. Earning interest on your checking balance is definitely an advantage, but it makes little sense to get an account that doesn't provide easy access to your money in the ways that you prefer. Online accounts that earn more also tend to offer less in-person service, so think carefully before you decide to switch accounts based on a higher APY. For a convenient look at the different accounts available to you online, you can try out our account comparison tool.
- Board of Governors of the Federal Reserve System (US), National Rate on Non-Jumbo Deposits (less than $100,000): Interest Checking [ICNRNJ], retrieved from FRED, Federal Reserve Bank of St. Louis