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Banking Banking Basics

Do Checking Accounts Earn Interest?

Many checking accounts don't earn interest, but plenty do. These, called interest checking accounts, can be found with traditional banks and credit unions, online banks, and financial technology companies. We'll recommend a few here.

An adult woman using an ATM
Ben Walker, CEPF, CFEI®
By Ben Walker, CEPF, CFEI®
Yahia Barakah, CEPF
Edited by Yahia Barakah, CEPF
Updated April 4, 2025
Fact checked

Most traditional checking accounts earn little to no interest. Why? Because historically, checking accounts have been designed for everyday spending, transfers, and use only — not necessarily for growing your balance with interest. But today, many checking accounts do earn interest. 

Learn what interest checking looks like, how these accounts work, and where to find the best ones.

Key takeaways

  • Although traditional checking accounts typically earn little or no interest, we recommend using a checking account that offers a good annual percentage yield (APY) rate to help you grow your money.
  • Traditional banks — like Chase, Bank of America, and Wells Fargo — have interest-bearing checking accounts, but they don't have competitive APY rates.
  • Some of the best checking accounts, including SoFi Checking and Savings1 accounts and Axos Rewards Checking account, provide much higher interest rates than traditional banks.

Do checking accounts earn interest?

Short answer: They can, but how much depends entirely on which account you choose. 

Not every checking account earns interest, but many banks and credit unions now offer accounts that do. That said, not all interest-bearing checking accounts are created equal. Some earn barely-there yields of just 0.01% or 0.02% APY on your balance, which you aren't likely to even notice unless you get one of those interest statements from your bank letting you know you're $0.12 richer (score?). Others, however, are much more competitive and might offer rates that come close to those of high-yield savings accounts.

For example, SoFi® offers a Checking and Savings account that helps you earn 0.50% (as of 01/24/25)2 on your checking balance with direct deposit. SoFi is a Member, FDIC.3

How checking accounts that earn interest work

An interest checking account works like any other interest-bearing account. You put money into the account, and your balance earns interest if you meet the requirements to qualify for the stated rate. 

Checking account rates include both a simple interest rate and an annual percentage yield (APY). The simple interest rate is the rate you earn on only the money you add to the account, called the principal. The APY, on the other hand, is the overall rate you earn on your balance, with compounding factored in. Compounding is what happens when your account earns interest, and that interest is added to your balance and included in future interest calculations. Put simply, it's interest on interest. 

Checking accounts might calculate interest monthly, weekly, or even daily (the best option because it allows for the most potential compounding).

Editor's note
You earn more compound interest the longer you leave your money alone to grow, so it's generally less of a factor for checking accounts because we tend to dip into these frequently.

Requirements to earn interest

Many checking accounts that earn interest come with requirements you have to meet to earn interest or qualify for the best rate. 

They might require you to meet a certain direct deposit activity threshold each month to qualify for the highest APY, for instance. Some may have minimum balance requirements to qualify, and others might require a certain number of debit card transactions. The point is, there's usually something you have to do in order to be eligible to earn interest. 

Pros and cons of interest checking accounts

Pros
  • You can earn money on your checking account balance
  • Checking accounts are typically easier to use than savings accounts
Cons
  • APY rates are typically lower than savings accounts
  • Some accounts may require a certain balance to earn the highest APY rate
Account name APY Monthly maintenance fee
SoFi Checking and Savings Up to 3.80% APY2 on savings with direct deposit4 $05
Axos Rewards Checking Up to 3.30% APY6 $0
Ally Interest Checking 0.25% (as of 01/1/25) APY $0

What's the difference between a checking and a savings account?

Checking account Savings account
Intended use Everyday deposits, purchases, and transactions Specific savings goals and earning interest
Interest Little to none on traditional accounts, but some accounts offer high interest Typically higher than interest checking accounts

Checking accounts are easily accessible bank accounts that let you quickly deposit, transfer, and withdraw money. They're great for everyday use because they typically allow you to make as many transactions as you need. Some, but not all, checking accounts earn interest.

Savings accounts are designed for storing money for long periods of time, or at least longer periods of time compared to checking accounts. This is partly because some savings accounts have transfer limits, such as up to six withdrawals per month, and partly because most savings accounts earn interest.

In general, checking accounts are better for everyday transactions while savings accounts are better for storing money and earning interest.

Learn more about checking versus savings accounts.

Alternatives to interest-bearing checking accounts

If your main concern is earning interest on your money, there are likely better options than interest-bearing checking accounts. For example, you can use high-yield savings accounts, money market accounts, and CDs as alternatives.

  • High-yield savings accounts: These are savings accounts designed to earn high interest rates on your stored balances. They might not have the flexibility of checking accounts, but they can help grow your money over time. Check out high-yield savings accounts.
  • Money market accounts: These are bank accounts that often pay higher interest rates than standard savings accounts. However, they might limit your number of transactions. Check out the best money market accounts.
  • CDs: A certificate of deposit (CD) is a type of savings account in which money is stored for a certain amount of time. For example, you might have a 6-month, 1-year, or 5-year CD. You typically can't withdraw any money without a penalty until the end of the agreed-upon time, which is the maturity date. Check out the best CDs.

FAQs

How much interest does a checking account pay?

Interest-bearing checking accounts pay an average of 0.07% APY, according to data from the Federal Deposit Insurance Corporation (FDIC). With that rate, you would only make about $0.70 on a $1,000 balance over the course of a year. Fortunately, you can find high-yield checking accounts with much higher interest rates in our list of the best checking accounts.

Do savings or checking accounts earn more interest?

The FDIC reports that the average interest rate for savings accounts is 0.47%, while for interest checking accounts is only 0.07%. While not all checking accounts accrue interest, most savings accounts do and typically at higher rates. However, interest rates can differ across banks, and a checking account may occasionally have a higher rate than a savings account at another bank.

Where can I find an interest checking account?

Many banks offer interest checking accounts, including Chase, Wells Fargo, and Bank of America. However, you typically won't find the best checking account APY rates at traditional brick-and-mortar banks. That's why we recommend checking the best online banks and their offerings before you choose one.

Bottom line

Many checking accounts don't earn interest, but we recommend using an interest-bearing checking account to help grow your money over time.

That said, savings accounts tend to provide better interest rates than checking accounts. So it may make the most sense to have a checking account for your everyday needs along with a savings account to earn higher interest on the money you set aside.

For our top checking and savings account recommendations, check out our list of the best banks.

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SoFi Checking and Savings
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SoFi Checking and Savings Benefits

  • Earn up to 3.80% APY1and collect up to a $300 cash bonus with direct deposit or $5,000 or more in qualifying deposits2
  • No account, overdraft, or monthly fees5
  • Get your paycheck up to two days early4
  • Access additional FDIC insurance up to $3 million3
Open an account with SoFi here

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