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Interest Checking Account
Interest checking accounts are provided by many established banks. Often referred to as “negotiable orders of withdrawal”, or “NOW” accounts, these banking products provide clients both with a checking account facility, as well as interest payments on any positive balance in the holder’s account. Interest payments are normally subject to specific threshold balances on the account. These can be absolute levels above which the holder must maintain their balance, or an average threshold balance that the holder must maintain across each month. Provided holders can meet the threshold levels, monthly interest bonus payments will appear in the holder’s checking account at the end of the month.
While NOW accounts may appear to be the best of both worlds – providing holders with all of the benefits of checkbook payments as well as interest normally reserved for deposit accounts, holders should be aware of banking fees. Holders of any checking accounts will be subjected to bank fees charged on each checkbook provided to the client. Some banks will even add an additional payment per check. Others will exact a standard monthly fee even if the users maintain the required threshold and don’t write any checks at all. Note that some banks may even charge a combination of these fees, so the old adage of “buyer beware” is one to remember when opening any type of bank account.
On the positive side, through the clever use of interest-bearing check accounts from banks that only charge their clients moderate fees, it is possible to maintain a checking account and accrue a positive interest balance at the end of each month. Add to this the flexibility to be able to write checks, transfer funds within and between banks and even to make use of the ATM facilities that many banks will also provide, then it is clear that interest-bearing checking accounts are banking instruments to seriously consider.
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