High yield checking accounts get harder to find

NEW YORK — High-yield checking accounts are getting harder to find. The interest rates they offer are getting stingier too. Yet for anyone looking to earn more than the negligible rates on CDs and savings accounts, a high-yield checking account is still worth considering.

How It Works

High -yield checking accounts let customers earn a higher rate of interest on a capped amount of the balance. The caps range from $500 to $50,000, with the most common maximum balance being $25,000, according to a study by Bankrate.com. But of the 14 highest-yielding accounts, 10 limited the highest interest rate to balances of $10,000.

The average interest rate on such accounts fell to 2.56 percent this year, down from 3.3 percent last year. By comparison, the average rate on a 1-year CD is 0.9 percent.

However, accountholders have to meet a few conditions to qualify for the interest rates. For example, the vast majority of high-yield checking accounts require a minimum number of monthly debit card transactions; typically 10 a month. Most accounts also require users to sign up for automated payment, direct deposit or online bill pay.

For customers who fail to meet the account conditions, the interest falls to an average of just 0.11 percent. That's in line with traditional interest-bearing checking accounts.

The Details

The number of nationally available high-yield checking accounts fell to just 27 this year, down from 41 in 2010. But local banks and credit unions offer more options; the total number of available accounts remained relatively steady at 57 this year, from 58 last year.

The Bankrate study surveyed 155 banks, thrifts and credit unions.