Interest Bearing Checking Account - What to Look For

There are a couple of things you should know when looking for an interest bearing checking account. Banks offer a few basic services. The two most common categories of services are non-transactional and transactional.

Non-transactional services have no direct bearing on financial transactions. They are supportive in nature, for example: marketing mail to customers, bank statements, handling phoned-in general queries.

Transactional services involve actual financial transactions, like: receiving deposits, servicing withdrawals, transferring account balances, granting loans, collecting loan payments, paying customers' bills. Services under this category gave rise to the term "transactional account".

A popular example of a transactional account is a demand deposit account, otherwise known as checking accounts. Before the advent of online banking, this was used solely for business convenience and not for the purpose of savings or earning interest. Thus, originally no interest was paid on this.

Now, with online banking much in vogue and becoming an industry of its own, an interest bearing checking account has become part of transactional services. This type of account has all the features of a traditional checking account, with interest earning capability added.

To some observers an interest bearing checking account is a cross-breed of the savings and the traditional checking program. To others, it is a savings account with check issuance privilege added. Whichever school of thought you pick, you can't lose.

Why can interest be paid now on checking accounts? Actually it had been effectively going on for quite some time even before online banking came. In an effort to be competitive, banks designed the automatic transfer service to attract clients to open two types of account: savings and checking. The tacit purpose of automatic transfer was to circumvent the no-interest rule on these accounts.

There are many ways to earn money while having it in a bank. The key is to know what to look for and search for something with a better return on investment. So how do you find the best places? It's easy, as most of the information you can find online in the comfort of your own home.

Click here to learn more about the interest bearing checking account and other free checking accounts.