How to Get the Most Out of Your High-Yield Checking Account

Most standard free checking accounts pay no interest, or only a very minimal amount such as 0.01% APY. High-yield checking accounts, like OnPath’s Rewards High Yield Checking, pay interest that’s higher than you’d earn on a typical savings account on balances up to the yield cap.

That means the money you use for groceries, utilities, and recurring bills may also be earning a meaningful return.

For many members, this eliminates the need to constantly move money back and forth between checking and savings just to get a decent yield.

Smart Ways to Structure Your Balance in a High-Yield Checking Account

Keep Your Core Cash in One Place

If you’re like the average household, you probably maintain a steady balance in your checking account to cover:

• Monthly bills
• Variable spending
• A small cushion for unexpected expenses or discretionary purchases

Most banking customers have become accustomed to the idea that checking accounts don’t earn interest. It’s the tradeoff you have to accept in order to maintain unlimited access.

High-yield checking accounts flip that expectation around. With these accounts, the money you need for everyday expenses can also be your interest-earning balance.

Let Direct Deposit and Bill Pay Do the Work

One of the simplest ways to maximize your yield is with direct deposit. When it’s set up, there’s no delay between getting paid and depositing a check. Once your paycheck hits your account, it begins earning interest.

The same idea applies to bill pay, just in reverse. There are rarely situations where paying bills early will earn you an early-payment discount. Most of the time, the better move is paying right on the due date. The longer your money stays in a high-yield account, the more interest it earns.

The difference in yield on any single bill isn’t huge, but across a full year of rent, utilities, and other recurring expenses, precisely timed bill pay can add up.

When everything runs through one well-structured account that’s as automated as possible, you spend less time moving money around and more time letting it work quietly in the background.

Let Your Emergency Cushion Earn Something

Many households keep thousands of dollars sitting in checking simply because they do not want to risk not having immediate access to money for unexpected car repairs, medical bills, or other emergency expenses. Accepting that those dollars would not earn much interest was the cost of accessibility and peace of mind.

High-yield checking eliminates that tradeoff for most savers. Your emergency cushion can stay accessible while still earning a healthy yield.

Know What to Do if You Go Above the Yield Cap

Banking and credit union customers who want to maximize their yield should pay close attention to the yield cap. For example, OnPath’s Rewards High Yield Checking yield cap is $10,000. That means account holders earn 6% APY* on average daily balances up to $10,000, and 0.5% on balances above $10,000.

Whether it’s a good idea to transfer any funds over the $10,000 cap depends on the other savings accounts you have. In some cases, it may make sense to just leave the excess funds in a high-yield checking account, especially if other savings accounts earn less than 0.5%..

For others, it may make more sense to put extra funds into a share certificate or money market account that earns more than 0.5%.

What works best for you will likely depend on what other accounts you have available and how much money you want to keep accessible in your checking account.

Does High-Yield Checking Replace a Savings Account?

Not necessarily. It depends on your financial situation, preferences, and savings goals. A separate savings account may still be useful for:

• Emergency funds that you prefer not to mix with spending
• Setting money aside for upcoming expenses, such as taxes or large purchases
• Longer-term reserves

Helping Greater New Orleans Banking Customers Make the Most of Their Money

Maximizing the yield on your savings is usually complex. Share certificates are great, but they require a long-term commitment. Savings accounts are useful for goal-oriented saving, but the interest rates may still leave a lot to be desired.

Rewards High Yield Checking from OnPath Credit Union gives members a unique opportunity to make the money they keep in their everyday account work for them. Opening a Rewards High Yield Checking account is fast, easy, and gives you access to all the other benefits of OnPath membership.