Earn 3%+ interest on cash with high interest checking

For years now interest rates on savings accounts have been nearly zero.  The news for the last few months was that the Fed might raise rates in September,  or maybe they won’t.  I don’t know what the Fed will do.  I do know that I get 3% interest on my uninvested cash, and I heartily recommend it to other folks managing their thousands.  I have a high interest checking account.  In exchange for a little hassle, these checking accounts pay you an above-market interest rate on a cash balance up to a certain amount.

The Hassle

The checking account I use is at Consumer’s Credit Union.  In order to qualify for the higher interest I need to do a couple things.  First, every month I have to have a direct deposit or an ACH deposit into the checking account.  At my work setting up direct deposit of my paycheck to a new account is pretty trivial, but your mileage may vary. (Seriously though, don’t let filling out one little form stand between you and an interest rate 3x as high as a halfway decent CD). Second, I have to use the debit card 12+ times per month.  I occasionally have a little trouble with this, as I prefer to use some sort of rewards credit card for my purchases, but with a little thought it can be quite manageable.  Third, I must agree to receive e-statements, rather than regular statements.  For me, this is a complete non-requirement, I hate paper statements. Lastly, I have to sign into the online account once per month.  With the interest piling up this is more entertaining that you’d think.

The Payoff 

For all of that trouble I earn 3.09% on my cash balance in the checking account up to $10,000.  I don’t find the limit to be extremely, well, limiting, because I throw everything that I can spare into my Roth and other retirement accounts.  One other perk I find huge is that the checking account reimburses ATM fees.  I’ve got to be honest, there are times this feels a little like a superpower (I’m so lame).  It’s incredibly liberating when you and your friends are somewhere that cash is a necessity and you’re surrounded by high-fee ATM’s.  I can’t find a limit to this on Consumer Credit Union’s website, and now I’m a little shocked that no one has purchased an ATM and simply printed themselves money.  Let’s see I’ll take $20 out from my ATM for which I charge myself a $2 fee. Then I’ll open the ATM put the cash back in, and make another withdrawal from my ATM…

The Bottom Line

It’s free money.  I swear, the amount of time I spend trying to convince people just to take the free money, I’d be making minimum wage if they just took it, then gave it to me (and I’d no longer be allowed to do it in Seattle, San Francisco or Los Angeles). There are several credit unions and small banks that offer a product like this, you just have to search for them.  I think Consumer’s is the best, but I’m prepared (and terribly excited…) to be proven wrong.  If you think you’ve got a better high interest checking account please sound off in the comments section.  (Doubly so if you can explain to me why buying an ATM and plugging it into my basement isn’t a license to print money. Disclaimer – If you do this and get sued/arrested…I can only thank you for providing a test case as I certainly don’t endorse it, but I am a little curious…)

Adam Woods

Adam Woods is a physicist. His research interests include building software to run and build geomagnetic models. Adam got interested in personal finance in the great recession when it became obvious an interest was necessary.

After harassing his friends and family (and a short intervention) he took to the web where he blogs about finance, investment, politics, and economics.

Adam is currently located in Boulder, Colorado where he can generally be found hiking, biking, or running a D&D campaign. He can also be contacted at adamwoods137@gmail.com.