Most Citizens checking accounts earn no interest, but a few do

Citizens Bank offers checking accounts in two categories: standard accounts that pay zero interest, and a small number of accounts that do pay interest. Which one you have depends on the specific account type you opened and the balance you maintain.

The standard Citizens checking accounts—like the Basic Checking and Premium Checking—do not pay interest on the money you keep in them. Your balance sits at 0% annual percentage yield (APY), meaning you earn nothing on it no matter how long you hold the account or how much money is in it.

Citizens does offer one checking product that does pay interest: the Citizens Bank Money Market Account. This is technically a money market account rather than a checking account, but it functions like one because it comes with a debit card and check-writing privileges. The interest rate on this account varies based on your balance tier and changes when the Federal Reserve adjusts rates. You can check the current rate on Citizens' website or by calling their customer service line.

Key Takeaways

  • Citizens Bank's standard checking accounts (Basic and Premium) pay 0% APY and earn no interest on your balance.
  • Citizens Bank Money Market Account is the only Citizens checking-like product that pays interest, with rates that change based on your balance and Federal Reserve decisions.
  • The interest rate on a money market account is typically lower than what you would earn in a dedicated savings account at the same bank.
  • Interest earned on any Citizens account is reported to the IRS on Form 1099-INT if the amount exceeds $10 in a calendar year.

How interest rates on checking accounts work

Banks set checking account interest rates based on what the Federal Reserve charges them to borrow money. When the Fed raises its benchmark rate, banks can afford to pay more interest to depositors. When the Fed lowers rates, banks lower what they pay you. Citizens adjusts its rates periodically, but there is no fixed schedule—changes happen when the bank decides to change them.

Interest on a checking or money market account compounds daily, meaning the bank calculates interest on your balance each day, adds it to your account, and then calculates the next day's interest on the larger amount. Over time, this compounding effect is small on a checking account but becomes meaningful on larger balances held for longer periods.

The amount of interest you actually earn depends on three things: the APY the bank offers, how much money you have in the account, and how long you keep it there. A $10,000 balance in a Citizens checking account earning 0% APY will earn $0 per year. That same $10,000 in a Citizens Money Market Account earning 0.01% APY would earn roughly $1 per year.

Why Citizens checking accounts typically pay no interest

Banks offer checking accounts with no interest because they use the money you deposit to make loans and investments that generate profit for the bank. The bank keeps that profit rather than sharing it with you. This is a trade-off: you get the convenience of a checking account with unlimited transactions, a debit card, and online access, and the bank gets to use your money for free.

Savings accounts and money market accounts pay interest because they are designed to hold money longer. The bank can count on that money staying in the account, so it can lend it out with confidence. Checking accounts, by contrast, are meant for frequent deposits and withdrawals, so the bank cannot reliably plan to use your balance.

Some online banks and credit unions do offer checking accounts with interest, but these are exceptions. They typically require very high minimum balances (sometimes $25,000 or more) or have other conditions attached. Citizens' standard checking accounts do not meet those conditions.

Citizens Money Market Account versus a savings account

If you want to earn interest on money held at Citizens, you have two main options: the Money Market Account or a traditional savings account. The Money Market Account lets you write checks and use a debit card. A savings account does not—you can only transfer money out, not spend directly from it.

The interest rate on Citizens' Money Market Account is usually lower than the rate on Citizens' savings accounts, because the checking features (debit card, checks) cost the bank more to maintain. If you do not need to spend the money directly, a savings account will earn you more interest.

Neither product will earn you much interest in the current environment. Citizens' rates on both products are typically well below 0.5% APY. You can compare current rates on Citizens' website or by visiting a branch. Rates change without notice, so check before you move money.

When interest earnings get reported to the IRS

If you earn $10 or more in interest during a calendar year on any Citizens account, the bank will send you a Form 1099-INT and report that income to the IRS. You must include this interest income on your tax return, even if the amount is small.

Citizens will mail the 1099-INT by January 31 of the following year. You can also view it online through Citizens' website if you have online banking set up. Keep a copy for your records when you file your taxes.

How to check your current interest rate at Citizens

Citizens publishes current rates on its website under the account details for each product. You can also call Citizens customer service at 1-800-922-9999 to ask what rate you are currently earning on your specific account. Rates vary by account type and sometimes by region, so the rate you see online may not be exactly what you earn.

If you already have a Citizens checking account, log into online banking and look at your account details or statements. Your current APY should be listed there. If you do not see it, call the customer service number on the back of your debit card.

Frequently Asked Questions

Can I switch my Citizens checking account to one that pays interest?

You cannot convert a standard Citizens checking account into a Money Market Account. You would need to open a new Money Market Account. Citizens can help you do this at a branch or over the phone, and you can keep your old checking account open or close it.

Does Citizens pay interest on joint checking accounts?

Interest rates are the same on joint accounts as they are on individual accounts. If your joint checking account is a standard checking product, it earns 0% APY. If it is a Money Market Account, it earns whatever rate Citizens is currently offering on that product.

What happens to interest if I close my Citizens account mid-year?

Citizens calculates interest through the day you close the account and includes it in your final balance. If the total interest earned that year reaches $10, you will still receive a 1099-INT form for tax purposes.

Is the interest rate on Citizens Money Market Account fixed or variable?

The rate is variable, meaning Citizens can change it at any time without notice. The bank typically adjusts rates when the Federal Reserve changes its benchmark rate, but Citizens is not required to pass along every Fed change to customers.

Would I earn more interest keeping money in a savings account instead of a checking account?

Yes. Citizens' savings accounts typically pay a higher interest rate than the Money Market Account because they do not include checking features. However, the difference is usually small—often less than 0.1% APY. If you need to spend the money regularly, the Money Market Account's checking features may be worth the slightly lower rate.