3 Times It's Smart To Keep Money In Checking Accounts, Even With High Savings Rates

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• High-yield savings accounts are still offering high rates.
• Even with high savings rates, sometimes storing your money in a checking account is better.
• Reasons to use a checking account for your funds include bills, bonuses, and high-yield checking rates.

High-yield savings accounts still offer high interest rates despite the Federal Reserve dropping rates at the last few meetings. But there are some circumstances where you'll want to keep your money in a checking account instead of taking advantage of high savings rates.

We've highlighted three reasons you might prefer to use your checking account to store your funds instead of a savings account below.

1. Using checking account balances as a cushion

Checking accounts and high-yield savings accounts have different purposes. Savings accounts are a safe place to keep funds that you're not planning on using immediately while checking accounts are better suited for the money you're planning on using soon.

"A checking account is more of a transactional account," says Chloé Moore, CFP® professional, founder of Financial Staples. "You have money that comes in, whether it's from your paycheck or any other sources of income, and then you have money that goes out for different expenses or bills that you pay."

Your checking account's balance can change frequently. If you don't keep track of how much you have in your account, there's a chance you could overdraw your account.

Many banks charge overdraft fees when you withdraw more money from your checking account than you have to spend. The Consumer Financial Protection Bureau finalized a rule that would limit overdraft fees to $5, but that could be overturned. For now, many banks charge overdraft fees as expensive as $35 per overdraft.

One way to avoid overdraft fees is to keep a cushion in your account by keeping a little more money than you need in your checking account at all times. Having a cushion makes it so that, even if you're hit with an unexpected expense, your account won't go into the negatives.

How much money you keep in your checking account for a cushion is up to you. "It really just depends on what makes my clients comfortable," says Moore. "Some clients have a few hundred dollars, and other people have several thousand."

Moore adds that you should also keep in mind how much your monthly expenses fluctuate when deciding on the size of your cushion. A budgeting app can help you do that by keeping track of your expenses month-to-month.

If your bank charges monthly bank maintenance fees, you'll also want to see if your account requires a minimum balance to avoid monthly fees when deciding on how much money to keep as a cushion.

2. Meeting requirements for checking account bonuses

Some of the best checking account bonuses can offer you hundreds to thousands of dollars if you open a new checking account and meet certain requirements.

Generally, you'll have to direct deposit a certain amount of money into your new account to earn the bonus. Sometimes, you'll also have to keep a certain amount of money in your checking account for a period of time.

For example, the Huntington Bank Platinum Perks Checking offers you $600 if you deposit at least $25,000 in your new account within 90 days of opening it, then maintain a $25,000 daily balance for 90 days. The Chase Private Client Checking℠ will give you a whopping $1,000 to $3,000 if you deposit at least $150,000 and maintain your balance for 90 days, but these deposits can be spread across multiple qualifying Chase Bank accounts.

Even if a bank account doesn't require you to keep a certain balance to earn the bonus, you'll have to keep the account in good standing until you get the money. Many of the checking accounts that offer bonuses also charge monthly service fees. If bank fees bring your account into the negatives, your account won't be in good standing anymore. To avoid bank fees, you'll need to keep enough money in your account to waive the fee, even if you don't plan on using the account.

3. Earning money through high-yield checking accounts

Savings accounts aren't the only types of accounts that can offer high interest rates. High-yield checking accounts exist and can even offer higher rates than their savings account counterparts. The average savings account interest rate is 0.41% APY according to the FDIC, but high-yield checking accounts can offer rates as high as 8% APY. In return, they generally have very strict requirements.

Most high-yield checking accounts put a cap on how much money in your account can earn their highest interest rates, and those caps are quite low. Many high-yield checking accounts require you to receive a certain amount of money in direct deposits each month. They might also require you to make a certain number of transactions each month.

This means that earning a high interest rate with high-yield checking accounts is generally only worth it if you're prepared to keep careful track of how much money is in your account.

Below, we're provided a list of some of the best high-yield checking accounts currently offered nationwide. Most of them are from online banks or credit unions since traditional banks don't generally offer high-yield checking accounts.

Featured High-Interest Checking Account Offers

Compare checking accounts that offer high APYs, rewards on debit card purchases, or both. APYs (Annual Percentage Yields) are accurate as of 01/24/2025.

• Upgrade Rewards Checking Plus and Performance Savings: Earn up to 2% cash back on purchases. Add a Performance Savings account to earn up to 4.14% APY on saving balances.*
• SoFi® Checking and Savings (Member FDIC): Earn up to a $300 bonus with qualifying direct deposits for eligible customers through 01/31/26. Earn up to 3.80% APY on savings balances (including Vaults) with direct deposit or qualifying deposits.**
• Discover® Cashback Debit Account: Earn 1% cash back on up on up to $3,000 per month in eligible debit card purchases (See website for details).***
• Truist One Checking: Earn $400 for opening a new Truist One Checking account online using code AFL2425TR1400 and completing qualifying activities (offer expires April 30, 2025).****