Updated on June 6, 2007.

HOW WOULD YOU like a checking account that earns 3% or more?

It the latest trend in banking. From online banks like ING Direct, to the online arms of traditional banks like HSBC and even brick-and-mortar banks like Jacksonville, Fla.-based EverBank, yield-chasing consumers now have a choice of interest-earning checking products. Even brokerages, like Schwab, are jumping into the game.

The catch: These accounts are typically available only online. This means, among other things, that you have to be comfortable not having a checkbook and a local bank branch to deposit a check or make a withdrawal.

By now, many consumers have become used to the idea of online banks, at least for certain functions. High-yield online savings accounts currently offer yields of 5% or more, and roughly 8% of U.S. households are taking advantage of them, according to market research firm Forrester Research. Many more enjoy the conveniences of accessing their brick-and-mortar bank's web site to pay bills and monitor accounts.

But are they ready to take their online banking relationship to the next level with an online-only checking account? As competition heats up, some banks are, well, banking on it.

"With so many competitors, it's getting tougher to get new customers, so they're trying to expand their relationship with the customers they have," says Catherine Graeber, vice president and a principal analyst with Forrester. "The more they expand it, the more loyalty they'll have."

After all, Graeber notes, the type of consumer who has an online savings account is the one most likely to chase high yields: He'll move his money as soon as another bank comes offering 25 basis points more than his current one. But once he has a checking account with that bank and starts using it to pay bills or set up direct deposit, he's more likely to stay put.

If you already have a high-yield savings account with an online bank or feel comfortable with a bank that doesn't have a local branch, these accounts are definitely worth checking out, says Greg McBride, senior financial analyst at Bankrate.com. The yields are great at more than 10 times the national average for interest-paying checking accounts, which now stands at 0.28%, according to Bankrate.com.

That said, they aren't ready yet to become your only checking account. Here's what you need to know.

Electric Orange From ING Direct

If you're familiar with ING Direct's Orange Savings account, its checking product the Electric Orange account is just as appealing in terms of fees and account minimums: It has none. And as with a regular checking account, with Electric Orange you get a debit card you can use for ATM withdrawals and in-store or online purchases. You also get unlimited check writing. There's no actual checkbook, but you can request online that ING mail a paper check to a recipient. Like many traditional banks' checking accounts, this one also comes with online-bill-pay capabilities. On top of that, your balance earns 4% a year or more.

ING Direct has no branches, but you can make fee-free withdrawals with your debit card from any ATM within the AllPoint network, which has 32,000 ATMs nationwide. (Those are typically ATMs you'll find in stores, delis and fast-food restaurants, but not in banks.) Coverage is pretty solid in the eastern part of the country and along the West Coast, but spotty in the Midwest and Southwest. A recent search for ATMs in New York City, for example, yielded 2,446 ATMs within a 50-mile radius, while a search for ATMs in Omaha, Neb., yielded only nine. So make sure you have enough ATMs at convenient places before you sign up. (For a coverage map and search engine, click here

For all its benefits, though, the Electric Orange account has one notable drawback: It's not easy to deposit checks. Apart from mailing your checks to ING or dropping them off in one of its Internet cafes (in New York City, Philadelphia, Los Angeles or Wilmington, Del.), the only way to feed that checking account is with direct deposit or by transferring from your ING Orange Savings account. So don't close your regular checking account just yet.

ING's Electric Orange Account: The Lowdown
Balance/Yield	Pros	Cons
$49,999 or less: 4% ,000 to $99,999: 5.25% ,000 or more: 5.30%.	* No fees, no account minimums; * No-fee ATM withdrawals with 32,000 ATMs nationwide; * Unlimited free checks (but no checkbook); * Online bill pay.	* Can't deposit checks in person (only direct-deposit, transfers from Orange Savings account or send your check by mail). * Free ATM coverage may be spotty in parts of the country.

EverBank's FreeNet Checking

EverBank has offered online-only checking for several years now, but only recently spruced up its yield. Depending on your balance, you'll now earn between 3.41% and 5.01% annually. But the $1,500 initial deposit requirement can be a setback, as well as the $4.95 fee for each month your balance falls under $1,500. (The fee is waived if you have direct deposit.)

Click here The catch: EverBank doesn't charge ATM fees, but its partners might. You can be reimbursed for any ATM charges up to $6 a month, but if you're in the habit of withdrawing your cash allowance daily, that might get too pricey.

EverBank's FreeNet Checking: The Lowdown
Balance/Yield	Pros	Cons
$9,999 or less: 3.41% ,000 to $24,999: 3.45% ,000 to $49,999: 3.65% ,000 to $99,999: 4.15% ,000 and above: 5.01%.	* You can make deposits at about 12,000 ATMs nationwide; * A paper checkbook; * Online bill pay; * Promotional 6.01% APY for the first three months after account opening.	* $1,500 initial deposit requirement; * $4.95 account fee for each month your balance falls below $1,500, waived if you have direct deposit; * $4.95 fee if you use online bill-pay and your average daily balance for the month is below $1,500.

Online Payment Account from HSBC Direct

HSBC was among the latest to jump into interest-earning checking products, launching its Online Payment Account at the end of May. It was worth the wait: This is by far the most flexible interest-earning checking account, in that you can make deposits and, of course, withdrawals at any of the bank's ATMs. In addition to that, consumers who already have an HSBC Direct Online Savings Account can make instant transfers between their savings and checking account, which helps maximize the time their savings earn interest, currently at 5.05% APY.

That should come in handy, indeed, considering the Online Payment Account's biggest drawback: No matter what your balance, the annual yield is only 2.5%. Compared with the other banks' offers, that's a little stingy.

HSBC's Online Payment Account: The Lowdown
Balance/Yield	Pros	Cons
2.50% APY	* You can make deposits and withdrawals at any HSBC ATM; * Instant transfers between HSBC's Direct Online Payment and Savings Accounts; * You can link to an unlimited number of outside accounts, with an unlimited number of transactions.	* Yield is only 2.50% APY; * No checkbook. HSBC can issue paperless checks upon request.

Schwab Bank Investor Checking

If you plan to keep less than $50,000 in your checking account, Schwab will give you the best bang for the buck its Investor Checking APY is 4.25%, no matter what your balance. To open this account, however, you need a Schwab brokerage account. Luckily, that isn't difficult to get, and the typical $1,000 minimum account balance is waived when you have both accounts. You can also link to any other account and make unlimited transfers for free, and you get a free checkbook and write personal checks at will. Customers also get a Schwab Bank Visa Platinum Check Card, which they can use for in-store purchases and ATM withdrawals. Schwab will rebate all ATM fees.

Other than that, Schwab's Investor Checking comes with the usual setback: To deposit checks, you need to mail them to the brokerage's operations center in Orlando or Phoenix, or you can drop them off at a Schwab branch. However, there are only 270 Schwab branches nationwide, so be sure there's one close to you if this is a concern.

Schwab's Investor Checking: The Lowdown
Balance/Yield	Pros	Cons
4.25% APY	* No fees, as well as free bill pay and direct-deposit services; * Generous yield; * Rebates on all ATM withdrawals; * A checkbook, so you can write unlimited personal checks, fee-free.	* You need a Schwab brokerage account; * Only 270 Schwab branches nationwide, so possibly no convenient location for check deposits.