Are High-Yield Checking Accounts Worth Your Time?

Today's bank customers are in a higher interest rate environment, where the best savings accounts and money market accounts are offering 5.00% APY or more. And the Fed seems unlikely to cut interest rates anytime soon. Now that cash in the bank can actually earn some decent yield, you might be feeling impatient with your near-zero interest checking account.

Some of the best checking accounts pay interest. But high-yield checking accounts are not an automatic winning move for your finances. Banks often have complex rules and limits for how you can earn a high APY on a checking account balance.

Let's look at a few reasons why even the best interest-bearing checking accounts might not be worth the effort to switch banks.

1. High-yield checking accounts don't always pay the highest APYs

Many banks offer what they call "high-interest" checking accounts, but the interest is not really that great. For example, some of the best checking accounts currently pay only 0.25% APY or up to 1.10% APY. That's better than nothing, and it's even better than some big banks' savings accounts. But it's not the best place to keep your extra cash.

2. Want that high APY? Get ready to jump through hoops

Some high-yield checking accounts really do pay a high APY -- for example, up to 5.00% APY! But you have to meet some strict rules and guidelines. For example, the Consumers Credit Union Rewards Checking rates highly as one of our best checking accounts, with a yield of up to 5.00% APY.

But to get the max APY on your checking account, you have to meet minimum monthly requirements for direct deposits, debit card purchases, and credit card spending. Axos Bank Rewards Checking offers 0.40% (up to 3.30%) APY, but to get that max rate, you have to maintain multiple Axos accounts, such as investing and loan payments.

3. You don't always earn the highest yield on all of your checking account cash

Many high-yield checking accounts don't pay the highest APY on your entire account balance. Interest-bearing checking accounts are often tiered accounts, meaning the interest rate changes based on the size or "tier" of balance that you have.

For example, Consumers Credit Union only pays its highest APYs on checking account balances up to $10,000. For higher balances, you'll have to settle for a lower APY of 0.20% or 0.10% APY.

Before you get excited about signing up for a new checking account, double-check the fine print. The words "up to" are significant. Just because an account promises interest yields of "up to" a certain percentage APY doesn't mean you'll actually earn all of that amount.

Want a real high-interest checking account? Here's a great one

One of The Ascent's picks for best checking accounts is a unique, innovative type of bank account, because it's offered through Wealthfront, an investment management platform and robo-advisor. The Wealthfront Cash Account lets you earn interest (5.00% APY) and it doesn't make you jump through hoops -- there are no tiered APYs.

And the Wealthfront Cash Account isn't just for earning yield. It gives you checking account features like online bill pay, direct deposit, and mobile check deposit via the Wealthfront app. And you get FDIC insurance (up to $8 million) through Wealthfront's partner banks. If you wanted, you could use the Wealthfront Cash Account for your everyday banking.

Another fun feature is Wealthfront's same-day withdrawals. You can leave your cash in this high-yield account and keep earning interest until the last minute, and then move your money anytime you want to an external bank account (that participates in the RTP® Network). Wealthfront's same-day withdrawals are now available seven days a week, even on holidays.

There are a few limitations with this account; it doesn't allow for shared accounts, so if you're part of a couple and you want a joint checking account, this might not be the best fit. But it's still a great place to store your extra cash.

Bottom line

Earning interest on your checking account balance can feel good, and most of the best checking accounts pay yields that are better than nothing. But be careful when choosing a high-yield checking account: the rules and tiered balance limits might cause you to end up jumping through too many hoops for not enough yield. If you want a simple high-yield account that gives you high APY and everyday checking account capabilities, consider the Wealthfront Cash Account.