By Sabrina Karl

When choosing a checking account, it might seem obvious that earning interest is better than not. But a look at the math quickly shows that often, it’s not the case at all.

Interest-bearing checking is certainly appealing, as it suggests you can conveniently keep all your bank funds in one place, without having to siphon funds off to a better-paying savings account.

But in reality, interest-bearing checking accounts have two strikes against them: they are more expensive than other options, while paying precious little interest in return.

According to Bankrate’s annual analysis, less than 8 percent of interest-bearing checking accounts were free of a monthly fee in 2021. Compare that to 48 percent of non-interest checking accounts that are free.

Bankrate further found that 2021’s average monthly fee among interest-bearing checking accounts climbed to a new record of $16.35. That’s up almost a dollar over the year before.

While some accounts offer ways to waive the fee, Bankrate found that the average minimum balance required to do so in an interest checking account surged in 2021 to almost $10,000.

Also, while direct deposit will sometimes waive the monthly fee, the share of interest checking accounts with that option is down to just 12 percent.

If you can’t avoid the monthly fee, it’s important to note the typically low yields on these accounts. Though some institutions offer more worthwhile rates, the national average paid on interest-bearing checking accounts is a paltry 0.03 percent.

That means an interest checking account holding a balance of $5,000 and earning the national average will pay a measly 10-15 cents per month. Even if the checking account pays 0.50% APY, that’s just $2 per month on a $5,000 balance.

Clearly, it’s worth doing the math to see if the fees are worth it in your situation.