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Are High Interest Checking Accounts Worth It?

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high interest checking account

There are a lot of high-interest checking accounts out there these days, but is a high-interest checking account worth it? The answer depends not only on how you use your checking account, but also the details of each account. As is so often the case with personal finance, the devil is in the fine print details. Be sure to understand all of the fine print before rushing off to transfer your checking accounts. Check out my Acorns review. High-Interest Checking Account Qualifications The first thing you want to look at is how to qualify for a high interest checking account. At most banks, getting the highest interest rate on your checking account requires you to make a minimum number of debit card transactions. That is because the bank earns money on each one of those transactions. In a way, with every debit card purchase you make, you earn the money the bank uses to pay you the higher interest. You also are usually required to get a direct deposit into the checking account each month. For many people, the only direct deposit they could get on a monthly basis is their paycheck. The idea is that by requiring a direct …

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When Can I Spend My Emergency Fund?

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Most professional financial advisors, and most non-professional know-it-alls as well, say that you should keep three to six months worth of expenses in an emergency fund for, well… emergencies. They aren’t wrong. You never know when life will throw you a curve ball, and when it does, you don’t want a few months of problems to turn into a crushing blow to years of hard financial work and smart decisions. However, the reality is that an emergency fund will never stand up to the worst financial calamities (long-term medical problems). Another reality that causes a lot of people stress is that your emergency fund is designed to be used. Over the course of your life, you fund will likely get drawn down, and then get refilled by more saving. Emergency Fund versus Reserve Fund When I was a professional financial advisor in Denver, I stopped calling it an emergency fund when people would find themselves torn about using it when they needed the money for something worthwhile. For example, imagine your son or daughter spent the last several years in the band. During that time, there have been numerous practices, and your child has built up a real love for …

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