Most checking accounts earn little to no interest, but some banks now offer small rates
The short answer: most checking accounts earn zero interest or less than 0.01% annually. A few banks—mainly online-only institutions and some credit unions—now offer checking accounts with rates between 0.01% and 4.50% per year, though the highest rates usually come with conditions like a minimum balance or a set number of monthly debit card transactions.
Whether your checking account earns interest depends entirely on which bank or credit union you use and which account type you choose. A traditional brick-and-mortar bank's basic checking account almost never earns interest. An online bank's checking account might. A credit union's checking account (called a share draft account) sometimes does.
The difference matters because even small interest adds up over time if you keep a large balance in checking. But most people use checking for money they spend soon, not money they hold, so the interest rate on checking is rarely the deciding factor in choosing a bank.
Key Takeaways
- Traditional banks typically pay zero interest on checking accounts, while online banks and credit unions may offer rates ranging from 0.01% to 4.50% depending on the institution.
- High-yield checking accounts usually require conditions such as a minimum balance, direct deposit, or a certain number of debit card swipes each month to earn the advertised rate.
- You can find your current account's interest rate on your bank's website, in your account agreement, or by calling customer service and asking for the annual percentage yield (APY).
- If you keep a large balance in checking, moving to a bank that pays interest on checking could earn you money, but the amount is typically small compared to what a savings account would earn.
How to find out what your checking account earns right now
Log into your online banking portal and look for account details or account summary. Most banks list the current interest rate and year-to-date interest earned. If you do not see it there, check your most recent paper statement—the rate should appear near the top or bottom.
You can also call your bank's customer service line and ask for the annual percentage yield (APY) on your checking account. Write down the exact number they give you. If they say "0.00%" or "no interest," that is your answer.
If you have been with the same bank for years, your rate may have dropped without notice. Banks lower rates frequently, especially when the Federal Reserve cuts rates. It is worth checking even if you remember earning interest in the past.
Why most banks pay nothing on checking
Banks use the money you deposit to make loans and investments, which generate profit for them. Decades ago, they paid checking account holders a small share of that profit as interest. Starting in the 1980s, most banks stopped, because they could attract customers through convenience and branch locations instead of interest rates.
The Federal Reserve's interest rate also affects what banks pay. When the Fed's rate is very low (near zero), banks have less incentive to pay depositors anything. When the Fed's rate is high, competition for deposits increases and banks raise their rates to attract money.
Checking accounts cost banks more to operate than savings accounts because of the unlimited transactions and debit card processing. That is another reason they rarely pay interest—the cost of running the account eats into any profit from lending your money.
Which banks and credit unions do pay interest on checking
Online banks are the most common source of interest-bearing checking accounts. Institutions like Ally, Charles Schwab, and Discover have offered checking with rates between 0.01% and 2.00% in recent years, though rates change frequently.
Some credit unions also pay interest on share draft accounts (their version of checking). Credit unions are member-owned, so they sometimes return profit to members through interest rather than keeping it. Rates vary widely by credit union, from nearly zero to occasionally above 1.00%.
A small number of traditional banks now offer high-yield checking to compete with online banks, but these are exceptions. If your current bank is a major national chain with physical branches, it almost certainly does not pay interest on checking.
What conditions come with high-yield checking accounts
Banks that pay interest on checking usually attach requirements to earn the full rate. Common conditions include:
- A minimum balance (often $500 to $2,500) that you must keep in the account at all times
- Direct deposit of your paycheck into the account each month
- A set number of debit card transactions per month (often 10 to 15)
- Enrollment in paperless statements
- No more than a certain number of transfers out of the account per month
If you do not meet the conditions, the bank pays a much lower rate—sometimes 0.00%—on your balance. Read the account agreement carefully before opening an account, because the fine print determines whether you actually earn the advertised rate.
Some banks also tier their rates: you earn a higher rate on the first $5,000, then a lower rate on anything above that. This structure means the account only makes sense if your balance falls within the higher-paying tier.
How much money you would actually earn
The dollar amount depends on your balance and the rate. If you keep $5,000 in a checking account earning 0.50% APY, you would earn about $25 per year. At 2.00% APY, you would earn $100 per year on the same balance. At 4.50% APY (the highest rates available as of 2024), you would earn $225 per year.
These numbers assume the rate stays the same all year, which is unlikely. Banks change rates frequently, and rates have been falling since mid-2023. The rate you see today may be lower in three months.
For comparison, a high-yield savings account typically earns 4.00% to 5.00% APY, which is significantly more than even the best checking accounts. If you have money you do not need to spend soon, a savings account is almost always the better choice.
When it makes sense to switch banks for checking interest
Switching banks for checking interest only makes sense if you meet all three conditions: you keep a large balance in checking (at least $5,000), you can meet the bank's requirements without changing your habits, and you do not rely on physical branches or local customer service.
If you keep $1,000 or less in checking, the interest earned would be a few dollars per year—probably not worth the hassle of switching. If you need to visit a branch regularly or prefer to call a local number for support, an online bank may frustrate you.
If you do decide to switch, open the new account first and make sure it works for you before closing your old account. Transfer your direct deposit and update any automatic payments. Keep the old account open for at least one billing cycle to catch any payments you forgot about.
Frequently Asked Questions
Can I earn interest on a checking account at a big bank like Chase or Bank of America?
No. Chase, Bank of America, Wells Fargo, and other major national banks do not pay interest on standard checking accounts. Some offer premium checking accounts with perks like fee waivers, but still no interest. If you want checking account interest, you need to move to an online bank or credit union.
What if I keep a very large balance in checking—like $50,000?
Even with a large balance, most checking accounts earn almost nothing. At 0.50% APY, $50,000 would earn $250 per year. At 2.00%, it would earn $1,000 per year. A high-yield savings account would earn $2,000 to $2,500 per year on the same balance. If you have that much money sitting in checking, moving most of it to a savings account would earn you significantly more.
Do credit unions pay more interest on checking than banks?
Some do, but not all. Credit union rates vary widely depending on the institution. Some pay zero interest, while others pay 0.50% to 1.00% or occasionally higher. You have to check with your specific credit union. Online banks currently offer the highest checking rates available.
If I switch to a bank that pays interest on checking, will my debit card still work?
Yes. Interest-bearing checking accounts come with debit cards and work exactly like any other checking account. You can swipe your card, withdraw cash at ATMs, and set up automatic payments. The only difference is the interest rate and any requirements you must meet to earn it.
Can the bank lower the interest rate on my checking account without telling me?
Yes. Banks can change rates at any time without advance notice in most cases. They may send you a notice, but they are not required to. This is why it is worth checking your rate every few months if you are relying on checking account interest as part of your banking strategy.