About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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1.21*%-$250kEverBankYield Pledge Checking - First Time Client (1st Yr)
OTHER TIERS: 0.71% $250k - $10mm
0.93%$2,500-Incredible BankIncredible Checking
0.65%--Alliant Credit UnionHigh-Rate Checking
0.60*%$15k-Ally BankInterest Checking Account
OTHER TIERS: 0.10% Up to $15k
Accounts mentioned in this post. Rates as of August 19, 2017.

Replacing Savings Accounts with an Interest Checking Account


Replacing Savings Accounts with an Interest Checking Account

I was recently asked about some ways that one could simplify banking arrangements. One thing that came to mind was to consolidate liquid bank accounts into just one account. Reducing the number of accounts can provide some simplification. However, a downside is that you probably won't be receiving the highest interest rate. That downside may not be a major issue in today's low interest rate environment when the best account rates are only a couple of dozen basis points higher than the average. I also like having more than one account just in case a problem comes up with an account, such as an account that becomes frozen. If I have to pay a bill or need to write a check, it would not be easy if I had only one account that becomes frozen.

If you're willing to accept these downsides and are still thinking about account consolidation, you probably need to consolidate to a checking account instead of a money market or savings account. Most checking accounts allow you to write as many checks as you want. They are the most liquid type of bank account.

So if you're looking for simplicity, you probably will want to consolidate your banking to just one checking account. So I thought it would be interesting to list some of the best free interest checking accounts. Since simplicity is an important factor, I'm not including any reward checking accounts. Most of the reward checking accounts are free checking accounts, but if you want a decent interest rate, you'll have to meet the monthly requirements. If you want a free checking account that pays competitive interest rates without monthly requirements, you will probably need to bank online. Below is a short list of internet checking accounts that are free and have a history of competitive rates. I'll just mention in the list a few of the account downsides:

  • Incredible Bank's checking - No paper checks, low ACH bank-to-bank transfer limits
  • ING DIRECT's Electric Orange checking - Rate tier that favors large balances, fee for paper checks
  • EverBank's Yield Pledge checking - Rate tier that favors large balances, potential monthly fee for online bill pay
  • Clear Sky Accounts' checking - Rate tier that favors large balances, no paper checks
  • Alliant Credit Union's High Rate checking - High rate requires monthly electronic deposits and e-statements
  • Ally Bank's Interest checking - Rate tier that favors large balances

Even if you are not thinking about consolidating your bank accounts down to just one, the above checking accounts can be useful to use as your primary checking account. If you use a free checking account that pays little or no interest, you will miss out on some interest as you pay your bills. You can minimize this loss by carefully moving your money from savings accounts to the checking account as you pay your bills. But if you want to keep things simple, a free checking account that pays a decent interest rate can help.

Related Pages: checking account, Incredible Bank, EverBank, Alliant Credit Union, Washington, Chicago, Houston, Denver, Los Angeles, San Francisco Bay, Ally Bank, Salt Lake City

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darkdreamer4u   |     |   Comment #1
It's the classic conundrum of putting all eggs in one basket. In my estimation, the drawbacks by far outweigh any benefits, at least for me personally. I'd rather keep my options open so that I can be quick on my feet if necessary.
PastTense   |     |   Comment #2
I quite disagree with Ken. If you want to simplify down to one account, you want to do it to a local financial institution; I would suggest a credit union. At a local institution you can cash checks immediately, have a safety deposit box, and yell at the manager in person if you have glitches in your account.

I, like the other poster, have a complicated financial structure--even though I am in the lower half of the income distribution. So I have free checking at a local bank; a bank with a reward checking account, a credit union with CDs and a reward checking account, a small savings account at Alliant credit union to do ACH transfers, a dormant account at Penfed ($5 in savings) in case they ever start offering attractive CDs again.

Mike B
Mike B   |     |   Comment #3
It does get annoying having several accounts, and then several banks. But I do also see it as protection if one account gets hacked and drained, or if there is some other type of freeze on one account. Knock on wood, that hasn't happened to me, but that's the only reason I have to keep multiple accounts.