High-Yield Checking: Losing Ground on Rates

by Chris Kissell

Just a few years ago, high-yield checking accounts were the favored darlings of hardcore savers. The accounts promised returns much higher than those of typical checking accounts.

The account holder had to jump through a few hoops each month. But doing so netted safe, relatively big, guaranteed returns.

However, high-yield checking accounts have lost much of their appeal in recent years, says Don Cox, Alfred Adams professor of banking and finance at Walker College of Business at Appalachian State University in Boone, N.C.

Cox explains his thoughts in the following interview.

What are the advantages and disadvantages of high-yield checking for the consumer?

High-yield checking accounts provide an opportunity to earn a higher interest rate on short-term deposits, especially as compared against checking accounts that pay no interest or only a token amount of interest. In the current interest rate environment, however, rates on these so-called high-yield accounts are only “high” relative to zero.

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