So, my bank this week launched a new checking account product, where as long as you (1) get e-statements, (2) get a direct deposit or withdrawal at least once a month, and (3) use your debit card at least 10 times in a month, you get a phenomenal 6% APY on the checking account. (If you don’t meet the requirements, you get a reasonable-nowadays 0.5% APY for that month.) The first two requirements I already meet, of course. Meeting that last one will require some effort, because currently I use my credit card for all my day-to-day purchases (and several automatic recurring bills) due to its nice cash back program. However, being able to have my main savings in my main checking account simplies my finance tracking, and I think if I use the debit card on small purchases and the credit card on large purchases I’ll end up earning more than I am now, if only slightly.

The really interesting thing to me, though, is that it purely counts the number of transactions, without paying any attention to the dollar amount. Thus it encourages me to do tricks like pump my gas a third of a tank at a time, stopping the pump and then restarting it by swiping my card each time, to artificially bump up my transaction count. In theory I could just meet my quota by pumping a dollar’s worth of gas 10 times, and then using my credit card like I always have been.

I have a Prime Money Market account at Vanguard, which is where I keep my emergency fund as well as money that I’m accumulating throughout the month for large monthly expenses such as my mortgage. It pays a pretty good interest rate, and is handy for automatically funding my Roth IRA there as well.

So when I need to transfer money from the money market account to my bank for something like my mortgage, I really have two options:

1. Do an electronic ACH transfer. This has my money leave my money market account at the end of the business day and arrive in my bank account two business days later. In-between, the money is somewhere in the ACH system and not earning interest in either account.
2. Write out a check, and physically bring it to my bank. The money gets credited to my bank account immediately, and there’s a delay before the check clears my money market account. In-between, the money is in both accounts earning interest. The money market account has no fees whatsoever for checks, and even the checks themselves are free.

So, if I write a check, I can get it to my bank a bit later, plus it earns interest in my money market account for a few more days than if I were to do an electronic transfer. The interest earned from being able to wait a couple days before doing anything plus the time for the check to clear, on an amount of money the size of my mortgage payment, can easily exceed a dollar and can hit over two, especially if there’s a weekend involved.

Now, I really like living in an electronic era, where my money is purely just numbers in a computer somewhere. Yet, I find myself writing checks, purely because its inefficiency causes more interest to accumulate. I’m not sure if mailing a check to the bank costs more or less than my gas and time stopping at the bank on my way home from work, but either way it’s less than the interest earned by using a check.