A high-yield checking account allows a customer to earn more interest on the money in his account than he would in a conventional checking account. A high-yield account usually offers a variable annual percentage yield (APY) that ranges from 0.50% to 0.75%, often four to five times higher than a conventional checking account, which typically offers about 0.10% to 0.20%. The variable interest rates are based on daily balances in the account and can fluctuate with the economy. Although the rates are high, high-yield accounts come with many restrictions and requirements.

High-yield checking accounts are typically offered to loyal bank customers with high balances and those who use a lot of bank services. High-yield accounts usually require a minimum amount to open the account, such as $100, and tend to require a high minimum average daily balance, such as $5,000. Some may offer as high as 5% interest, but require a minimum balance of $25,000. Unless you have such a high balance, the interest rates of high-yield checking accounts tend to be much lower than the 1.25 to 2.10% interest rates of money market accounts or CDs.

Read the fine print to determine the account’s other requirements and restrictions. Some accounts require mandatory use of debit cards, direct deposit, and electronic statements. Some stipulate a minimum number of transactions. Failure to comply with these requirements defaults the interest rate down to a more conventional rate.

Watch out for added fees that may eat up the benefit of a high-yield account. Look for an account deal that does not charge fees for monthly services or ATM withdrawals. Larger financial institutions, such as Charles Schwab Bank, ING Direct, and Zions Bank, may offer more high-yield checking options to choose from than smaller banks.

Despite the restrictions and requirements, most high-yield accounts, such as E*Trade’s, offer perks, such as free overdraft protection, free unlimited check writing, and online bill pay. Always be sure your checking account is FDIC-insured, which protects accounts up to $250,000 in case of bank failure.