What is a premium checking account?

For many, a checking account is a helpful and effective tool for making transactions and managing their expenses. However, some might find they can take their financial management further with a premium checking account and the many tools and banking services that come with it. Let’s look at the benefits and drawbacks of premium checking accounts and whether they’re right for you.

How a premium checking account works

A premium checking account is a type of checking account that offers more features and services than other kinds of checking accounts, including the possibility to earn interest. However, premium checking accounts could possibly come with higher minimum balance requirements. Here are some of the key benefits premium checking accounts may offer:

• Waived checking account fees: Premium checking accounts also typically reduce or waive certain fees, such as out-of-network ATM fees.
• Discounts on personal banking services: Many banks provide premium checking account holders access to discounts on other products and services like checks, safe deposit box rentals and financial guidance.
• Higher transfer limits: Your premium checking account may also come with higher limits for daily transactions and money transfers, such as P2P payments.
• Better loan terms: Some banks might offer premium checking account holders lower interest rates on loans.
• Interest payments: Many premium checking accounts pay interest on your balance letting you earn interest on deposits you otherwise might not with other types of checking accounts.

Premium checking account requirements

To qualify for a premium checking account, you’ll typically need to meet certain conditions.

• Higher minimum balance: Many premium checking accounts typically come with a minimum balance requirement that is often higher than a typical checking account. Some banks may factor in the funds of other accounts you hold at the institution when calculating your total balance.
• Direct deposit: Depending on the bank, you may be required to set up direct deposit to fund your premium checking account.
• Existing accounts: To qualify for some premium checking accounts, you may need to have preexisting accounts with the institution.

How to open a premium checking account

The process for opening a premium checking account may be different from your standard checking account in a few ways. You may need to demonstrate that you can comfortably meet the requirements of the premium checking account, potentially with a formal application process or even a specific period of meeting the given balance requirements. At other banks and financial institutions, it might be the same process for opening a checking account as any other. Speak with a representative at your bank for more information.

Premium checking account: Pros and cons

While premium checking accounts may offer various perks and features there may be some potential drawbacks:

Premium checking account advantages

• Waived fees: Since many premium checking accounts offer to waive certain fees, you may be able to save on routine banking costs.
• Premium benefits: A premium checking account may help you obtain access to services you would otherwise have to purchase separately. Premium benefits may include financial guidance, priority customer service, access to additional tools and services.
• Interest: If your premium checking account pays interest, it allows you to earn interest on deposits you use for daily transactions.

Premium checking account downsides

Maintaining higher balances: Some account holders may find it challenging to consistently keep enough money in their account to meet their premium checking’s minimum requirements. This may result in additional fees or your account being switched to another type of checking account.

Opportunity cost: While premium checking accounts sometimes pay interest, you may be losing out on potentially higher returns, through other products such as other types of savings accounts and CDs.

Is a premium checking account worth it?

Premium checking accounts can offer various potential benefits, but the additional requirements may be challenging for some to meet. When deciding whether premium checking is worth it for you, it may be helpful to consider what features you’re most interested in and how comfortably you can meet the minimum balance requirements.

For example, if you plan to make extensive use of the financial guidance services and would find higher transfer limits for P2P payments helpful, it might be worth the effort of maintaining the balance requirements of the premium checking account. However, if you don’t plan to use any of the additional tools and services and expect that consistently meeting these requirements could prove challenging, another type of checking account may be better suited for your personal needs.

In summary

A premium checking account offers additional benefits and features beyond that of other checking account types, typically with higher minimum balance requirements and other conditions. Premium checking account holders may be granted special access and discounts on other banking products and services. Considering whether meeting the requirements for a premium checking account may help determine whether premium checking is right for you.