Posted by Chuck on July 23, 2018
Checking Accounts

Published on July 23rd, 2018 | by Chuck

58

What’s the Best Simple High-Interest Checking Account?

We spend a good couple hours each month keeping the Best Checking and Savings Rates Page up to date, so I was surprised when I didn’t have a quick answer to a basic question from reader Mathias:

What is the best interest rate on a checking account without any hoops involved to get the rate? I want an account where I can set my payroll and direct debits without having to think about how much balance it needs to have at any given time.

When looking through the list on our Best Rates page, all of them are saving or money market accounts – only the complicated high interest accounts are checking accounts.

All, that is, except one: the Memory Bank 1.6% APY checking account. (Direct Link)

The accounts without hoops are almost all savings or money market accounts: with checking accounts the banks feel they are offering a service without having to offer a decent interest rate. Only the Memory Bank checking offers a reasonable interest rate on a simple, no-frills checking account.

To be clear, there are numerous high-interest checking options available, such as Consumer’s Credit Union 4.59% account on up to $20,000, Heritage Bank 3.33% account on up to $25,000, and many more. If you rarely have more than $25,000 in your checking account at any time, it’s probably worth just making Consumer’s or Heritage your regular checking account and going through the hoops for the significant extra interest earnings.

However, if you aren’t willing to deal with hoops or if your regular checking account fluctuates to numbers much higher than $25,000 (and you want to stick with just one checking account), the Memory Bank account is a solid option.

Another option is to open a no-interest checking account at the same bank as your high-yield savings account and simply transfer out any funds you aren’t currently using into the savings with the instant transfer option. A tried-and-true example would be the Discover Bank checking which is known as a solid online checking account (even offering 1% back on debit transactions), and they also typically offer a competitive savings rate (currently, 1.75%).

Ultimately, many people just want the convenience of a competitive interest rate on their checking account without having to deal with hoops or transfers, and the Memory Bank is the best option. This is especially true for those whose checking accounts fluctuate a lot due to MS or whatever, and want to earn interest for the time their float is sitting doing nothing.

I don’t know much about the actual Memory Bank checking product – do they have online bill pay? is their online login functional? etc. – maybe someone who’s used it can chime in on this.

Follow-up Post: What’s the Best High-Yield APY Checking Account Option?



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mcafeeee
mcafeeee

I opened an account a few months ago for the sign up promotion. They do offer bill pay. Online site seems pretty standard with external transfers allowed if you register and link accounts.

Vernon Dudley
Vernon Dudley

There is a 2K daily limit from the memory bank site. As always externally initiated transfers are not subject to the 2K limit.

t
t

I agree that Discover Bank is amazing. Their customer service is superb. I always get a live person on the line and fraud alerts or fraud use are quickly resolved.
I imagine most people want to avoid the hassle of overdraft or withdrawal limit.
You can set up overdraft protection to link a savings account to the checking account so you can send your payroll directly to the savings account without worrying about bouncing your checking account.
I can open several savings account with them to bypass the 6 withdrawal limit since I have autopay set on all my credit cards. Make sure to do the aaii.discoverbank.com version of the savings account to get the higher (right now 1.8% APY) rate.

Ann
Ann

“I agree that Discover Bank is amazing. Their customer service is superb. I always get a live person on the line”

24/7, 100% US-based!!

They just need to up their ACH speed.

Dan - Legal Bank Robber
Dan - Legal Bank Robber

The online interface is pretty good I’d say above average nothing amazing but a solid checking account. I’d consider using if I didn’t mind transferring to high rate online savings. They have all the features of any other bank.

Robert Edmonson
Robert Edmonson

I opened the Memory bank checking account a couple months ago for the $100 bonus and 1.6% interest. So far very happy with it. No fees, mobile check deposit and bill pay. I just opened their new money market account too with 1.85% interest and no fees.

Steve
Steve

Does the money market have 6 transaction limit (deposit and withdrawals) before fee kicks in or is it 6 withdrawals?

Robert Edmonson
Robert Edmonson

Yes, the money market has the 6 withdraws limit

Ryan Goldstein

I’ve been using Incredible Bank as my primary checking and savings accounts for years. They used to offer interest checking, but they have since stopped accepting applications for interest-bearing checking accounts. They grandfathered current customers, so I’m still earning 0.93% APY on my checking account there, with the savings account currently at 1.88% APY (with a $25,000+ account balance – 1.21% APY for balances under $25,000). Their checking account also comes with unlimited domestic ATM fee reimbursements.

Davy
Davy

If it’s no longer open to new apps, what’s the point other than bragging?

Ryan Goldstein

To provide another data point, that a bank other than Memory Bank did offer a fairly high interest checking account.

Davy
Davy

Lots of banks “did” offer higher interest checking accounts. Still not sure I see he point of your DP.

Matt P
Matt P

I wish there was an increased rate just for a monthly DD, but I don’t know of any that dont have a low cap like 5% on first $500. The effort to make debit card purchases is not enough to justify a few dollars per month in extra interest income for me.

Wesley in Boulder
Wesley in Boulder

You can easily get check writing set up for the Vanguard Prime Money Market Fund, which is earning 2.07% – 0.16%(expense ratio) = 1.91%. Not quite as liquid as a true checking account, but still a nice place to park highly accessible cash.
https://investor.vanguard.com/mutual-funds/profile/VMMXX

King
King

The 2.07% yield is after the 0.16% expense ratio. The yield of funds is always after the expenses AFAIK.

t
t

is the lack of liquidity really worth the extra 0.15-0.2% when Memory Bank is offering 1.85% APY and Discover AAII is offering 1.8%?

David H
David H

I use Fidelity’s Cash Management account with a money market fund (SPRXX) and get a 1.87% interest rate on checking. I get checks and an atm card. There is an initial balance of $2,500 for SPRXX and a minimum balance of $2,000 required.

JC
JC

David, just wanted to clarify that you are saying you can hold money market mutual funds such as SPRXX in a Fidelity Cash Management account? I thought the Fidelity Cash Management account was only eligible for FDIC deposits at the approximately 0.25% APY and that you were required to have a Fidelity brokerage account for the mutual funds? Also, do they do automatic sweeps when you deposit money into SPRXX and automatically sell your SPRXX position down when checks or ACH transactions clear similar to the core fund account in the Fidelity Brokerage account?

Thanks,

JC

David H
David H

The Fidelity Cash Management account supports brokerage account features and you can trade within the account. There is no automatic sweep into SPRXX so you have to buy SPRXX in a trade whenever you receive cash in your cash management account. Fidelity will automatically sell SPRXX to fulfill any redemptions for checks, ach or debit card transactions.

Dan
Dan

Ya I would also appreciate a little more clarification regarding how you go about setting this up? Are you saying you can default to have your cash held in the SPRXX money market, and there’s no buying or selling required when you want to utilize the funds?

Dan
Dan

Just spoke with Fidelity on the phone and the only option available for cash management core position is the standard FDIC-insured deposits position. So maybe there’s a way to set it up (separate money market account with check writing available), but it doesn’t seem like its possible to do it in the standard cash management checking account (would love to be wrong about that)

David H
David H

The check writing feature will withdrawal money from both the FDIC deposits and your money market fund (SPRXX). The process of buying SPRXX is not automatic and will require you to purchase SPRXX.

Dan
Dan

Chuck William Charles I tested out David’s strategy here and it seems to work quite well. i would even go so far as to say it warrants its own post or mention somewhere. lots of people use checking accounts like fidelity, schwab because of the no-hassle perks (checks, atm rebates, no foreign debit transaction fees etc), and this is a bit of a roundabout way to get a high interest rate, but its something that i dont think many people know about. the SPRXX money market interest rate fluctuates daily but its competitive or better than most of the standard savings accounts out there (currently 1.84%). david might be able to correct me if im wrong with anything here since he’s been doing it longer, but the strategy is to use the funds in the CORE FDIC-Insured Deposit Sweep (the only default holding that fidelity allows for cash in the cash management account) and initiate a trade with some or all of those funds. You buy SPRXX which is fidelity’s money market mutual fund. there is no transaction or trade cost (i think because all fidelity mutual funds are free to trade in a fidelity account). the trade executes at the end of the day and then you will have whatever amount you wanted held in that SPRXX fund. from there its just like holding money in the standard sweep CORE option, and writing checks and making ach transfers and payments automatically sells out of the SPRXX position for whatever amount is needed. It seems to me that it takes money first from the CORE position and then sells SPRXX for whatever remainder is needed to fund the transactions. Then when you get new money into the account, you need to initiate a new buy of SPRXX each time otherwise the money will just sit in the default low-interest CORE position. Its clunky but it works and i think a lot of people who are forgoing higher interest for the convenience of fidelity (not sure if similar strategy works in schwab) could benefit. as david said the difference is 0.25% in CORE (for holdings $0-$99,000, then jumps to 0.53% for $100,000+) vs about 1.84% in SPRXX. let me know if you have any questions

M
M

FYI: You can buy very-short-duration, secondary issue U.S. treasuries (as little as a couple weeks duration) yielding over 2.1% in the “Fixed Income” section of your MerrillEdge account.

Jeremy
Jeremy

Merill has the Preferred Deposit currently 2.07% if you put in $100K. Don’t have to keep it, it’s just the initial required amount. It’s much clunkier though because you have to initiate buys and sells.

Jeremy
Jeremy

Schwab has other sweep accounts you can have designated. I don’t have a Schwab account, so someone with a Schwab account should give more particulars.

Jeremy
Jeremy

Just found this out! +5!

Jeremy
Jeremy

Fidelity changed the minimum deposits to $0 on SPRXX.

Robert
Robert

New to this. Bought “YOU BOUGHT PROSPECTUS UNDER SEPARATE COVER FIDELITY MONEY MARKET (SPRXX) (Cash)” but I have not noticed any account value change since the purchase a week ago. Do they pay interest quarterly or annual?

Zack
Zack

What about Beam? 2-4% checking account, no minimum amount

Dan - Legal Bank Robber
Dan - Legal Bank Robber

That’s a savings account not checking though.

Tim
Tim

My only fear of recommending Memorybank is the fear that the rate they are offering is just a teaser, which will eventually be withdrawn once you’re fully ensconced in their account.

I don’t know if they have a long track record of providing such competitive rate, until recently they also had monthly hoops to jump through to maintain the rate just like all other high APY checking accounts.

Rex
Rex

Barclays Online savings 1.75%

MSer
MSer

Chuck, doesn’t such a pathetic question drive you to distraction? Too much “bother” to earn 2x more for 5 minutes effort a month? The guy deserves a swift internet kick in the arse for being so lame/lazy

Mike L
Mike L

I’ve used All America/Redneck Bank for a while now. The rate just went up to 2% for the Money Market recently.

JC
JC

Memory Bank only provides 3 free starter paper checks. Beyond that you need to order checks through them or on your own. There is a $2,000 per day (and $6,000 per month) maximum transfer (mobile check deposit, ach withdrawal) limit if initiated through Memory Bank.

Fred
Fred

I believe Memory Bank uses the same backend for bill Pay as Suntrust and some other banks. I don’t normally push payments from my bank since Discover stopped paying me to do so, but I did a few when I first opened the checking, and was very comfortable with the interface.

I opened the checking with $500 of CC funding months ago, and today opened the savings (1.85%) with another $500 of CC funding (instant approval and both accounts show up under my login, but the funding is on hold for 7 days). Not if you would be limited to a combined $500 if both accounts were opened together.

Rick
Rick

why is memory bank 1.6 being the golden choice here? if this article was actually written on 7/23, isnt ally and discover both higher (around 1.75-1.85 currently) and they are both no fees at all..am i missing something?

vince
vince

Checking vs savings

William Charles

Discover & Ally are those rates on the savings accounts, they don’t offer that on the checking account.

Brandon
Brandon

So savings has a limit of 6 withdrawals a month limit. Money Market accounts offer checks, but keep the 6 withdrawals a month. Checking allows as much as withdrawals as you like (useful for churners and people who have many cards they use and therefore need to withdraw more than 6 times a month).

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