Do Checking Interest Rates Pay Better Than Savings Account Interest Rates?

It may seem like an optical illusion, but many checking accounts do in fact pay better interest rates than savings accounts.
Financial Expert
Managing Editor
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women calculating savings account interest rates

A trip to discover the best savings account rates online can be a startling experience. After you compare the best checking account interest rates, that is.

What might well find, if you happen to make that comparison, is that a few checking accounts are now paying higher interest to depositors than their savings counterparts.

This goes against years of well-worn conventional wisdom. Savings accounts pay better interest because the bank has more time to lend out your money to other people and pocket the interest rate differential. The pesky checking account, though, continually experienced in and outflow.

Once, maybe, that was true. But now, something has changed.

Banking Dynamics in a Post-Rich Society

The reality that the best checking accounts are paying better or equal interest to the best savings accounts sometimes necessitates, for those who see it, a re-evaluation of what’s going on with banks right now.

One important consideration is that banks need your checking account more than they need your savings account. Part of this is because the checking account is the foundational banking relationship for millions of Americans. Part of this is due to the banks changing their business models.

Banks are making easier money from transactions than from lending. When you think about the fact that JPMorgan recently had a blow-out quarter with $2.4 billion in profit, you can see how that $40 billion from overdraft fees would come in handy to pay some bills and, hopefully, some dividends.

How to Find the Best Checking Account Rates

Finding a bank with the best checking account to meet your needs is as simple as using our search tool. Try it now and find an interest-bearing checking account.

The Upside of the Down Economy for People Who Are Smart with Their Money

This economy has some definite benefits for people who are smart with their money. The ability, through a checking account, to get a solid interest rate is highly appealing. Plus, banks have developed comprehensive technology systems, online banking the prime example, that improve the overall banking experience.

Some high interest checking accounts, though, demand high minimum balances. That, too, is part of being smart with your money: meeting that minimum so that you can get that interest rate.

Andrew Freiburghouse brings a wealth of tax expertise to MoneyRates, drawing on seven years as a junior partner at Pronto Income Tax of California, Inc., where he prepared around 7,000 tax returns. His exceptional skills extend to representing clients before the IRS, notably reducing a taxpayer’s debt from $72,000 to $700. Now based in Brooklyn, NY, Andrew is leveraging his extensive experience to establish his own tax practice, continuing his commitment to providing exceptional financial guidance.
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