Charles Schwab released the news today that they are rolling out a brand new checking account. With this checking account, you earn an astonishing 4.25% annual percentage yield.

There are a few other places where you can earn a nice yield on a checking account, but they come with certain restrictions. ING Direct offers high yield checking but you have no access to paper checks. Etrade also offers high yield checking but you have to maintain a $5,000 minimum.

I don’t think that any of these are bad options, but the account from Schwab definitely makes things much easier.

The question I have, though, is whether this yield is enough to get you to switch over to a Charles Schwab account. There is always a lot of talk about what investment vehicles yield higher returns and are easiest to use, but are we that concerned about our checking accounts?

Founder and CEO Charles Schwab had this to say:

“The financial world lives off lazy money. There is inertia, and in some respects, that’s exactly why we decided we had to make this a very powerful offering.”

I’m convinced he’s pretty much right on about this. Most people aren’t really looking to change their checking account because they’re comfortable with what they have and they’re used to it.

I’d also like to talk about another aspect of this and other accounts. The yield of the account is not the only important aspect to concern yourself with. We also need to have account separation and distinction.

The point of having a high yield is to speed up the effects of compounding. This only happens when the paid interest stays in the account and contributes towards future gains. Checking accounts aren’t usually known for their increasing balances.

If you’re thinking of using an account like this to serve as both your checking and savings accounts, you’ve got to be careful. It’s far too tempting to tap your savings if you don’t have the balances separated.

Like any financial product, you’ve got to weigh your options and make decisions after careful consideration.

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