What Is A Dividend Checking Account (All You Need To Know)

What Is A Dividend Checking Account?

Can you earn dividends with your checking account?

What are the essential elements you should know!

Keep reading as I have gathered exactly the information that you need!

Let me explain to you what is a dividend checking account in simple terms!

Are you ready?

Let’s get started!

What Is A Dividend Checking Account 

A dividend checking account is a type of checking account that you can use for your day-to-day banking needs and where you earn a dividend on your account balance.

Typically, you’ll find dividend checking accounts offered by credit unions as opposed to traditional banks (although you may find them at some traditional banks).

In essence, with a dividend-bearing checking account, your credit union pays you a return on your balance much like a savings account while you have access to your funds to perform your daily financial transactions.

You can consider the checking account with dividends as a hybrid between a savings account (or a certificate of deposit) and a checking account where you can regularly use the account for your financial transactions but earn dividends on your account balance.

Account Features

Although different credit unions will offer different types of dividend checking accounts, the most common feature of such accounts are:

  • You can open the account by putting in a minimum deposit 
  • You’ll earn dividends on your account balance 
  • You can do direct deposits
  • You can get online statements 
  • You can write checks
  • You can get a debit card linked to the account 
  • You’ll have mobile banking access 

In addition to the above dividend checking account features, your checking account balance with credit unions is insured up to $250,000 by the National Credit Union Administration.

Dividend Returns

You can practically say that checking accounts do not provide you with any return on your money. 

At best, you may get a few cents or dollars here and there but nothing close to what your money has the potential of earning.

With a dividend checking account, you can actually earn some return on your account the same way as you would with a savings account but have the ability to use the account as much as you would a checking account.

You are essentially paid interest in the form of dividends paid directly to your account (most of the time on a monthly basis).

Account Qualification

Certain types of checking accounts paying dividends require that you meet specific qualification criteria to be entitled to receive dividends.

For example, the Neighbors Federal Credit Union has four dividend checking account qualifications criteria per month:

  • You must perform at least 10 debit card swipes
  • You must maintain an average daily balance of $1,500
  • You must perform at least 1 ACH deposit or withdrawal 
  • You must be enrolled for estatements

If you meet the qualification criteria, you’ll earn dividends and have the flexibility to use the account as your checking account.

There are online banks that offer dividend checking accounts without charging you any monthly fees and may have no minimum deposit requirement for you to open your account.

Dividend Checking Account Examples

Different credit unions and banks offer dividend checking accounts with different features, options, and requirements.

Let’s look at a few examples of dividend checking accounts to illustrate the concept.

The first example is the dividend checking account offered by Credit Human having the following features:

  • Requires a $25 minimum deposit when you open the account
  • Pays dividends on a monthly basis
  • Monthly fees are waived if you are enrolled in direct deposit or get online statements
  • You can write unlimited checks and debit card usage
  • You have free online and mobile banking access 

The second example is that of Wright-Patt offering dividend-bearing checking accounts having the following features:

  • You need to deposit a minimum of $1,000 in your account
  • You can write unlimited checks
  • Free mobile and online banking 
  • Access to debit or ATM card 
  • Higher dividend rates for balances over $25,000

What Is A Dividend Bearing Checking Account Takeaways 

So, there you have it folks!

What are dividend checking accounts?

Dividend checking accounts are a type of checking account where you are able to deposit and spend your money just like a checking account while earning a dividend on your account balance.

You can find dividend checking accounts offered by credit unions but you may also find some traditional banks or online banks that offer the same type of product.

The benefit of having a checking account bearing dividends is that you can have your money work for you while it is sitting in your checking account.

Be sure to shop around to find the checking account that fits your needs as you may have to deposit a minimum amount on the day you open the account, pay monthly maintenance fees, have dividend qualification criteria to meet, and so on.

I hope I was able to explain to you what are dividend bearing checking accounts and how they work.

Good luck opening your account!

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With that being said, let’s head right back to our main topic!

Overview of What Is A Dividend Checking Account

  • A dividend checking account is a type of checking account that you can use on a day-to-day basis and earn a return on the balance in your account
  • It’s like a hybrid between a savings account and a checking account
  • You earn interest on your account balance in the form of dividends
  • Different dividend checking accounts have different dividend payment qualification criteria and requirements so you’ll need to shop around 
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