Most Citizens Bank checking accounts do not pay interest
Citizens Bank offers several checking account products, and the vast majority of them—including their basic checking, student checking, and senior checking accounts—pay no interest on the money you keep in them. Your balance sits at zero percent annual percentage yield (APY), meaning the bank does not pay you to hold your money there.
Citizens Bank does offer one checking product that does pay interest: the Citizens Premium Checking account. This account pays a small amount of interest, but the rate varies based on your balance tier and changes over time. The interest rate is typically much lower than what you would find in a dedicated savings account or money market account at the same bank.
The reason most checking accounts pay no interest is structural. Checking accounts are designed for frequent deposits and withdrawals—you move money in and out constantly. Banks use the funds you keep in checking to lend out at higher rates, which is how they profit. Savings accounts, by contrast, are meant to hold money longer, so banks are willing to pay interest to keep that money with them.
Key Takeaways
- Citizens Bank's basic, student, and senior checking accounts pay zero percent interest on any balance you maintain.
- Citizens Premium Checking is the only Citizens checking product that pays interest, though the rate is typically lower than savings accounts at the same bank.
- Interest rates on Citizens Premium Checking vary by balance tier and change periodically, so you should check the current rate before opening the account.
- If earning interest is your goal, a Citizens savings account or money market account will pay significantly more than any checking account.
How Citizens Premium Checking interest works
If you open a Citizens Premium Checking account, interest accrues based on your daily balance. The bank calculates interest daily but typically credits it to your account monthly. The rate you earn depends on which balance tier your account falls into—higher balances earn higher rates, though the difference is usually small.
Citizens publishes current rates on their website, but they change periodically and vary by region. Before opening the account, log into Citizens' website or call their customer service line to confirm the current rate for your state and the balance tiers that apply. Do not assume the rate you see advertised today will be the same next month.
The interest earned on a checking account, even a premium one, is typically modest. A $10,000 balance earning 0.05% APY generates about $5 per year. If you are trying to grow savings through interest, a dedicated savings account or money market account at Citizens will pay substantially more.
Why checking accounts pay less (or nothing) compared to savings accounts
Banks structure their products around how you use the money. A checking account is built for constant movement—deposits, withdrawals, transfers, bill payments. The bank cannot count on your money staying put, so they do not offer interest as an incentive to keep it there.
A savings account, by contrast, signals that you intend to hold the money longer. Banks reward that stability with interest. Money market accounts, which sit between checking and savings in terms of access, typically pay even higher rates because they restrict how often you can withdraw.
Citizens Bank's savings accounts and money market accounts currently pay higher rates than their checking products. If you want to earn interest on your money while keeping it accessible, opening a separate savings account at Citizens and linking it to your checking account is a straightforward approach.
How to find Citizens Bank's current checking account interest rates
Citizens publishes rates on their main website under the accounts section. You can also call Citizens customer service at 1-800-922-9999 to ask about current rates for your state. Rates vary by location, so a rate available in one state may not apply in another.
When you call or visit the website, ask specifically about the Citizens Premium Checking rate and the balance tiers that determine how much interest you earn. Also ask whether there are any minimum balance requirements to earn the advertised rate—some accounts require you to maintain a certain balance to may have access to for interest.
If you are comparing Citizens to other banks, remember that rates change frequently. A bank offering higher rates today may lower them next month. Check rates at multiple banks before deciding where to open an account, and plan to revisit rates annually to see whether moving money to a higher-paying account makes sense.
Alternatives if you want interest on your money
If earning interest is important to you, Citizens Bank offers better options than checking accounts. Their savings accounts and money market accounts pay higher rates and are designed specifically for saving. You can link these accounts to your checking account for easy transfers when you need to move money.
You can also look beyond Citizens Bank. Online banks and credit unions sometimes offer higher rates on both checking and savings accounts than traditional banks like Citizens. The tradeoff is usually less access to physical branches, but if you do most of your banking online, the higher rates may be worth it.
Another strategy is to keep a small amount in checking for daily expenses and move the rest to a higher-yielding savings account. This way you earn more interest on the bulk of your money while maintaining the checking account you need for bills and everyday spending.
What happens to interest if you close your Citizens checking account
If you close a Citizens Premium Checking account, the bank pays out any interest that has accrued up to the date of closure. Interest is typically calculated through the last day the account is open, so you do not lose money by closing early in the month.
The interest you earned is reported to the IRS on a Form 1099-INT if the total exceeds $10 for the year. You will owe federal income tax on that interest at your ordinary income tax rate. State income tax may also apply depending on where you live.
Frequently Asked Questions
Can I earn interest on a Citizens basic checking account?
No. Citizens' basic checking account, which is their most common product, pays zero percent interest. Only Citizens Premium Checking pays interest, and the rate is typically very low compared to savings accounts.
How much interest will I actually earn on Citizens Premium Checking?
The amount depends on your balance and the current rate, which changes over time. A $5,000 balance earning 0.05% APY generates about $2.50 per year. Check Citizens' website or call them for the current rate before opening the account.
Is Citizens Premium Checking worth it just for the interest?
Probably not. The interest paid is minimal. Open a Citizens Premium Checking account if you want the features it offers—like higher transaction limits or waived fees—not because of the interest rate. Use a savings account for earning meaningful interest.
Do I have to pay taxes on checking account interest from Citizens?
Yes. Interest is taxable income. If you earn more than $10 in interest during the year, Citizens sends you a Form 1099-INT, and you report that interest on your federal tax return. State taxes may also apply.
Can I move money between my Citizens checking and savings account to earn more interest?
Yes. You can link your checking and savings accounts and transfer money between them as often as you want. Keeping most of your money in a savings account and only what you need for immediate expenses in checking is a common strategy.