SAN FRANCISCO — Pioneering discount stock brokerage Charles Schwab Corp. is setting its sights on the banking industry with a no-fee checking account that will pay an annual yield of 4.25 percent, towering well above the interest rates on similar products that don't require minimum balances.

The no-strings-attached checking account to be introduced today marks Schwab's most aggressive bid yet to attract more customers to a banking subsidiary that opened four years ago.

The move also furthers Schwab's efforts to diversify beyond the stock trading commissions that once accounted for most of its profit. The San Francisco-based company now collects more revenue from mutual funds, money management, investment advice and other sources that aren't as likely to fluctuate with the ups and downs of the stock market.

Schwab is setting up its new checking account so money can easily be transferred to an adjoining brokerage account, but customers aren't required to buy and sell stocks to qualify for the high interest rate.

"Clients tell us they want a great value, easy access, and a combination of banking and low-cost investing with no hidden requirements or gimmicks," said Charles Schwab, the company's founder and chief executive. "This service delivers on all these fronts."

Although the checking account's yield is likely to be adjusted as short-term interest rates change, Schwab is promising it will always pay substantially more than the industry average. The current average rate on checking accounts is just 0.3 percent, according to the latest weekly survey by Bankrate.com.

"It's a compelling offer because most free checking accounts don't pay any interest at all," said Greg McBride, a senior analyst for West Palm Peach, Fla.-based Bankrate. Even so, McBride said most consumers are better off keeping their money in a high-yielding savings account — some of which pay rates above 5 percent — while keeping just enough funds in their checking accounts to cover their monthly bills.

Other Internet-only accounts come close to matching Schwab's yield. For instance, INGdirect.com offers a 4 percent yield on a "paperless" checking account and pays 5.3 percent on balances greater than $100,000.

Schwab's high-yielding checking account represents a bit of a counterattack against major U.S. banks that recently have been trying to become more formidable forces in the stock brokerage industry by undercutting the market leaders.

Both Bank of America Corp. and Wells Fargo & Co. offer free online stock trades to customers who maintain certain account minimums on banking products.

Although Schwab ranks among the financial services industry's best-known brands, McBride doubts the high-yielding account will lure away many customers from big banks that pay far lower interest rates. That's partly because closing an existing checking account can be a hassle.

Schwab hasn't made much of a dent in banking so far. Through March, Schwab's bank had 151,000 account holders with $11.4 billion on deposit. Schwab has 6.8 million brokerage customers.