Interest-bearing checking accounts are the simplest method of investing a cash surplus. Since they operate like a regular checking account, no action is required on your part to invest your cash surplus.

A checking account that earns interest is generally required to maintain a minimum balance at all times. The bank or financial institution might also place limits on the number of transactions that can occur during one month in the account. Transactions over the maximum number of transactions will be subject to additional transaction fees.

Interest earned by the account is computed based on the daily average balance in the account. The rate of interest earned by the checking account is comparable to the rate of interest earned on a passbook savings account.