I need a simple checking account with interest where I can deposit my paycheck and pay all my bills automatically. I have tried a few high-yield accounts that started with 4 percent interest, but after a few months, they dropped to almost nothing without any warning. I do not need physical branches, checkbooks, or ATMs, just a reliable interest rate.
Someone mentioned Enzo, where the rate is tied to the Fed rate. That seems interesting, but does anyone know of a better option? I am not looking for the highest rate, just one that does not suddenly drop to zero. Also, is there any service that acts like Google Voice but for banking? Something where I can use one routing and account number to forward payments so I do not have to keep changing my details when I switch banks? I assume nothing like that exists but thought I would ask.
It is really hard to find a checking account with a stable high interest rate.
Your best bet might be Fidelity. They let you use their account like a checking account with direct deposit, bill pay, and a debit card. There are two ways to do it:
Their Cash Management Account acts like a regular checking account but pays a little over 2 percent. You can also move your money into a money market fund like FDLXX, which pays closer to 4 percent. When you spend money, it auto-sells from the fund, so it works like a high-yield checking account with tax benefits.
A Fidelity brokerage account. The default cash position earns around 4 percent in SPAXX. It works similarly to the first option, but ATM fees are not refunded.
I have used both, and they are better than most high-yield checking accounts.
Evander_James said: @Aza
This sounds like what I need. Are there any fees? Can I do ACH transfers easily? Any limits?
No fees that I have seen, and I have not run into any transfer limits. I have only been using it for a while, though. If you want to check, you might want to start a thread in the Fidelity section of this forum. Their customer service is usually pretty quick to answer.
Darwin said: @Aza
How do you get 4 percent? I see the default rate is around 2 percent. Is the higher rate tied to Fed rates, meaning it can drop later?
You need to manually move your cash into a money market fund like FDLXX or SPAXX. Those funds pay higher rates, and they are automatically used when you spend money.
Right now, those funds pay around 4.5 percent, but yes, the rate can drop if the Fed lowers interest rates. That is true for any high-yield savings account too.
Pat said:
Wealthfront offers a 4.05 percent interest rate on their cash accounts. I have not read all the fine print, though. Just saw it when I logged in.
Wealthfront looks similar to Enzo. The rate depends on partner banks, not promotions, which is good. I like that they have modern apps, but they are both newer companies.
Many local credit unions have rewards checking where if you use direct deposit and a certain number of debit card transactions, you get 4 to 5 percent interest. The downside is that they can drop the rate anytime.
@Daisy
That is what I have been doing, but the problem is they lower the rate without warning, so I have to switch banks often. Fidelity sounds better since their rate moves with the Fed rate.