If you’ve been interest in personal finances for a while you will know that there is something called a high interest savings account. High interest savings accounts are around 1.5% APY or higher. A lot of companies give high interest checking accounts. It’s rare though to find a company that gives a high interest rate on checking account.
That’s where SoFi Money comes in. I’ve used their checking account since it came out. There are no fees and no minimum balances. The checking account had an interest rate of 2.25% for most of the time I’ve used it.
Note: The Federal Reserve has lowered interest rates due to COVID-19 and the interest rate has since been lowered. The current rate is only 0.25% which is still a competitive rate for a checking account. While you should probably keep your money in a high interest savings account during volatile times, it will increase again as the economy bounces back.
High interest checking vs savings
The nicest part about having a high interest checking account is being able to not worry about transfer limits. Typically you can only do 6 transfers a month, because of federal regulations related to savings accounts. You don’t have those limits with a checking account. This makes it much easier to plan, save, and spend all from a single spot.
Spending the money in a checking account can be tempting. If it is for you, it may be better to have a savings account with another bank that you transfer your emergency fund to. There is nothing wrong with having multiple accounts. I currently split my money because a local Federal Credit Union has an account with 2.02% APY on their high interest savings account. Don’t be afraid to look for a good deal elsewhere with a better rate.
So how can a high interest checking account help you save? No matter where you put your emergency fund, you’ll probably always have some money in checking. You may have your paycheck scheduled to direct deposit into it. If that’s the case, your money could sit around for a few days. That’s time that it could be earning you money.