Historically, the average rate on a checking account is usually less than an  online savings account or longer term certificate of deposit. Though there are high yield checking accounts that can earn a yield upwards to 5.00% or more.

These higher yielding checking accounts are usually called “reward checking accounts” and require you to do a certain amount of transactions per month.

Transactions include, using the checking account for one or more automatic transactions per month,  either a direct deposit of a payroll check,  Social Security check, or an automatic monthly withdrawal to pay a bill. Most reward checking accounts also require you to receive electronic statements. Some checking accounts are offered by credit unions that you have to join.

Including a higher checking yield, some banks also offer other benefits including reimbursement of ATM withdrawal fees (there is usually a maximum dollar amount per month), free checking and no minimum balance.

Most banks also have a maximum dollar amount that can earn the higher checking yield.  If you fail to meet all the transaction requirements for a certain month the account will probably earn a yield of less than one percent. The good news is the lower yield is only for that particular month, the following month you can earn the reward yield if all the required transactions are done.

Here is a short list of banks offering Reward Checking Accounts. These rates are as of April 1st, 2009. Please check the bank’s website for more recent rates.

• Connexus Credit Union – 5.15% APY up to $25,000
• Malvern Federal Savings Bank – 5.01% APY up to $35,000
• Altra Federal Credit Union – 4.25% APY up to $25,000
• Grand Bank of Texas – 5.02% APY up to $25,000
• Focus Bank – 4.51% APY up to $25,000

Banks that offer reward checking accounts allow you to sign up online. Banks also make it very convenient to open and maintain an account even if you are located hundreds of miles away.