April 7, 2023
Understanding the differences between high-yield checking accounts and savings accounts can help you enjoy greater financial security and flexibility when managing your money. While high-yield checking accounts offer some important advantages for credit union members, there may be qualifications to earn dividends. On the flip side, checking accounts are more accessible than most savings accounts.
If you’re considering opening or switching to a high-yield checking account, take a moment to learn about the unique advantages you could enjoy — as well as any requirements that may need to be met.
What Is High-yield Checking?
Most standard checking accounts do not earn interest, or dividends, at all and simply provide easy access to the funds they contain. High-yield checking accounts, however, offer the best of both worlds: easy access to your money while getting a higher rate of return for your funds. The dividend rate earned on these accounts can be significantly higher than the average annual percentage yield (APY) of a regular savings account, making them a truly lucrative option for money management.
High-yield accounts requirements:
- You may be required to make a specific number of transactions or direct deposits into high-yield checking each month to earn dividends at the agreed-upon rate.
- A minimum account balance is usually required. This can be much higher than the minimum account balances required for savings accounts and other financial arrangements.
- If the minimum balance is not maintained, you may be charged low-balance fees.
- If you fail to meet the requirements listed for your high-yield checking account, you may lose some or all of the earnings that you would otherwise be entitled based on your account agreement.
For members who typically maintain a high balances in their checking accounts, however, these high-yield accounts may be an excellent option to earn on their money.
High-yield Checking vs. Savings1
One of the primary differences between checking and savings accounts is the ease with which you can access the funds the accounts contain. Savings accounts, as their name suggests, are intended for saving money for future needs. While you may be able to access the funds in these accounts at any time, they are not designed to allow transactional use in the same way that checking accounts can. For instance, you may not be able to use your savings in conjunction with electronic payments or with debit card transactions.
Some savings options offer higher dividend rates, especially for members who make a sizable initial deposit and maintain a minimum average account balance each month. The funds held in most of these accounts accrue interest and increase in value over time if the money is not withdrawn. However, penalties or fees may be assessed if the balance of the account drops below a specific level set by the financial institution.
On the other hand, high-yield checking accounts combine some of the best features of high-yield savings and checking accounts. These accounts allow you to access your funds easily through a variety of methods, including debit transactions, printed and electronic checks, and digital payment options. At the same time, these accounts also earn dividends that is comparable to the best rates offered for high-yield savings accounts with larger average monthly balances.
High-yield Checking at La Capitol
Finding a quality high-yield checking account near you may be easier than you think. At La Capitol Federal Credit Union, our Choice Checking accounts2 offer some exceptional benefits for members:
- A 24-hour grace period for potential overdrafts, which can allow you to manage your funds with greater ease
- Access to your funds 24 hours a day, seven days a week for your convenience
- Up to 4.25% APY on high-yield checking balances up to $10,0002
- No-cost checking if you complete at least 15 debit card transactions, excluding ATM transactions, during a single month OR if you maintain a $1,000 minimum balance3
- Faster processing of direct deposits and account transfers to put your money in your hands faster4
- Waived fees for small overdrafts to your account of under $10
- Paperless statements to streamline access to your account information
- Available personal identity protection services through BaZing in conjunction with La Capitol Federal Credit Union5
What’s more, we make these types of accounts easy to access. To open a Choice Checking account with us, all you have to do is become a member and maintain a Regular Savings account at La Capitol.
Discover the Perks of Membership
If you are looking for a financial institution that supports your current and future financial success, La Capitol Federal Credit Union has the guidance to get you where you want to be. And the best part? Becoming a member is easy. Visit us online today to learn more about membership and see how you can grow wealth through high-yield services.
1 The following applies to all La Cap Checking accounts: Membership is required a Regular Savings Account with a $5.00 par balance. Checking account approval is based on the evaluation of creditworthiness. A fee of $8.00 monthly service charge for a low balance will be assessed if average daily balance requirements are not met. The $8.00 monthly service charge for a low balance is waived for members under 24 years old and have a Simple Checking account. A $2.00 monthly service charge will be assessed if paper statements are provided. The $2.00 monthly service charge for paper statements is waived for members who are under 17 years old or over 60 years old or any account enrolled to receive electronic statements (eStatements). Unless otherwise stated overdraft programs are available for additional fees, please see the fee schedule for specific services and fees. Some restrictions apply. Please contact a La Cap representative for additional details.
2 La Cap Choice Checking is subject to approval. APY = Annual Percentage Yield and reflects Membership is required and subject to approval. Membership requires $5.00 par balance in a primary savings account. The minimum opening deposit required is $50.00. Rates are accurate as of Effective Date: 11/28/22 and subject to change without notice after account is opened. The Choice Checking is a tiered rate account Tier 1) Balances up to $10,000 earn an APY up to 4.25%; Tier 2) Balances $10,000.01 or greater earn an APY of 0.52%. To qualify for the stated high yields, you must have fifteen (15) debit card transactions, excluding ATM transactions, posted to your account before the end of the statement period. If the required debit card transactions do not post to your account before the end of the statement period, your entire account balance will earn .10% APY. A monthly low balance fee of $8.00 will be charged to the account when 1) the average daily balance falls below $1,000.00 anytime during the statement period; OR 2) 15 debit card transactions, excluding ATM transactions, do not post to the account by the end of the statement period. A monthly paper statement fee of $2.00 will be charged to the account unless 1) the account is enrolled to receive statements electronically, OR 2) the member is under 24 years of age. When you agree and consent to receive your statements electronically, you are eligible for a refund of ATM fees up to $25.00 charged for using an ATM not owned by La Capitol FCU. Dividends are calculated on a daily balance method, compounded, and credited monthly. The stated APYs are calculated using compounding dividends and are not guaranteed withdrawals will decrease the APY earned. La Cap reserves the right to limit the number of Choice Checking accounts per membership, joint or individually. Federally insured by NCUA. “Earn up to $400” dividend estimate is based on the potential amount of dividends that could be earned over 365 days on a Choice Checking account with daily account balance of $10,000 at an APY of 4.25%. This is not a guaranteed amount. Actual dividends earned will be based on the individual member’s account balance, eligibility, and qualifications.
3 No cost option is available when your average daily balance does not fall below $1,000.00 during the statement period; OR you have 15 debit card transactions that are not ATM transactions, complete and post to your account by the end of the statement period and you affirmatively consent to receive your statements electronically. Each month these are not met your checking account will be charged an $8.00 low balance fee and a $2.00 checking paper statement fee. Low balance fee and monthly service fee waived for accounts owned by members age 24 and under. When an account holder reaches age 25, monthly service fee and low balance fee become applicable.
4 You may receive access to your ACH credits up to 2 days early. We post ACH credits the day we receive them and when we receive them depends on the timing of the payer’s payment instructions. Federal holidays may delay availability.
5 BaZing is available with Choice Checking and Simple Checking accounts. The fee is $4.99 per month. Cell phone and personal identity protection are services provided by a third party and are subject to additional terms and conditions. Separate activation for these benefits is required. To activate identity monitoring, please go to www.bazing.com, log in, select Protection under Categories, and follow the easy sign-up steps.activation for these benefits is required. To activate identity monitoring, please go to www.bazing.com, log in, select Protection under Categories, and follow the easy sign-up steps.