This Free Checking Account’s Interest Rate Is 75x Higher Than Average
If you bank at a traditional brick-and-mortar bank, your money probably isn’t growing there.
That’s because traditional banks — with their thousands and thousands of physical locations — typically offer annual percentage yields (APYs) as low as 0.01% on their checking accounts. That’s pretty puny.
Online banks, on the other hand, can offer their customers higher interest rates because they have less overhead. They have fewer employees and zero physical locations. They don’t have to pay for all those buildings — and all that air conditioning.
One of the highest interest rates we’ve found for an online checking account is from SoFi Money. That checking account earns you up to 4.50% APY with direct deposit, which is the percent in interest (including compound interest) you’ll earn on your money in a year.
Frankly, that’s practically unheard of. According to the FDIC, the average checking account earns 0.05% APY — which makes SoFi’s rate of 4.50% more than 75 times higher. Heck, it’s better than the rate on a lot of savings accounts.
Sure, you might be able to find a savings account with a slightly higher yield. But SoFi offers a one-stop checking-and-savings account, with the best of both worlds. You can keep all your moolah in the same place and get all the benefits of checking and savings without having to shuffle your money between accounts.
Checking and savings combined. You might think that’s like oil and water. But maybe it’s more like peanut butter and jelly, and it works. It’s like bacon and eggs. Like macaroni and cheese. Like Batman and Robin!
No Fees for This Account
SoFi (which is short for “Social Finance”) is an online personal finance company that first made its name as an affordable option for refinancing student loans. It has since expanded into mortgages, personal loans — and now banking.
And here’s another big plus for SoFi’s checking-slash-savings account: There are no fees.
There are no account fees, no monthly fees and no overdraft fees. And SoFi will automatically reimburse you for ATM fees at about half a million ATMs that are in the Visa, Plus or NYCE networks.
You can open an account with no minimum balance.
Making the Switch to an Online Account
Even though online banking is growing in popularity, brick-and-mortar banks still dominate the industry.
But keeping your money in an online account might make sense for you if, like a lot of us, you pretty much do your banking on your computer or your phone, anyway.
SoFi Money takes a number of steps to make the transition easy:
- ATMs: With the automatic reimbursement of ATM fees, you can use just about any ATM anywhere for free.
- Checks: If you occasionally need a physical check — to pay your landlord or whatever — you can get checks from SoFi for free.
- Website: SoFi’s website and mobile apps have detailed FAQs, and they make it simple and easy for you to see any information you want to see.
Should You Switch to an Online Bank?
Here at The Penny Hoarder, overdraft fees are one of our pet peeves. About 30% of checking account holders pay overdraft fees each year, according to the Consumer Financial Protection Bureau. And the average overdraft fee got higher in 16 out of the last 17 years, and is now approaching $35.
SoFi Money won’t charge you overdraft fees. Instead, it cancels transactions when your account balance drops to zero.
Here’s an upside: Your account comes with a handy spending tracker called Relay, which gives you a useful, high-level view of your finances — which should make it easier to avoid a zero balance.
If you don’t already use an online bank, you’ll have to get used to having no physical branches to visit. That means you can’t make cash deposits or get face-to-face customer service from a bank teller. You can, however, talk to someone on the phone.
That could be a change from what you’re used to. But you might find it’s worth it for a free checking account with one of the highest interest rates we’ve ever found.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He’s trying to go digital.
*Sofi Checking and Savings (member FDIC):
* 10x based on FDIC monthly savings account rate as of October 24, 2023.
1. Up to $300 Bonus Tiered Disclosure
New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus when they set up Direct Deposit of at least $1,000 during the Direct Deposit Bonus Period. Cash bonus will be based on the total amount of Direct Deposit. Direct Deposit Promotion begins on 12/7/2023 and will be available through 12/31/24. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A., Member FDIC. SoFi members with Direct Deposit can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the 4.50% APY for savings (including Vaults). Members without Direct Deposit will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Interest rates are variable and subject to change at any time. These rates are current as of 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
2. APY disclosures
SoFi members with Direct Deposit or $5,000 or more in Qualifying Deposits during the 30-Day Evaluation Period can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. Members without either Direct Deposit or Qualifying Deposits, during the 30-Day Evaluation Period will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Only SoFi members with direct deposit are eligible for other SoFi Plus benefits. Interest rates are variable and subject to change at any time. These rates are current as of 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
3. Fee Policy
SoFi’s account fee policy is subject to change at any time.
4. Additional FDIC Insurance
SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at SoFi.com/banking/fdic/terms. See list of participating banks at
SoFi.com/banking/fdic/receivingbanks.
5. ATM Access
SoFi has partnered with Allpoint to provide you with ATM access at any of the 55,000+ ATMs within the Allpoint network. You will not be charged a fee when using an in-network ATM, however, third-party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
6. Early Access to Direct Deposit Funds
Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date but may vary.
7. Overdraft Coverage
Overdraft Coverage is limited to $50 on debit card purchases only and is an account benefit available to customers with direct deposits of $1,000 or more during the current 30-day Evaluation Period as determined by SoFi Bank, N.A. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Members with a prior history of non-repayment of negative balances are ineligible for Overdraft Coverage.
