For years, interest rates were terrible, and there really wasn’t much benefit to having a high-yield savings account.
But the last couple of years have been good for savers as we have seen rates improve considerably!
Here are a few of our partner banks and the current rates they are offering:
If you’re looking to make the most of your savings, a high-yield savings account is a great way to do just that. But with so many options out there, it can be overwhelming to figure out what to look for.
To help you out, I’ve put together this handy list of things to look for:
8 things to keep in mind when choosing a high-yield savings account.
1. APY (Annual Percentage Yield):
APY is a crucial factor to consider when choosing a high-yield savings account. It represents the amount of interest you’ll earn on your deposited funds over the course of a year, taking into account compound interest. A higher APY means your money will grow faster, making it an essential aspect to look for in a savings account.
However, it’s important to look beyond the advertised APY and carefully review any restrictions or limitations associated with the account. Some banks may require a minimum balance to earn the highest APY, while others may offer a promotional rate that expires after a certain period. Be sure to read the fine print and understand any conditions that may impact your earning potential.
2. Promotional vs. Permanent Rates:
When shopping for a high-yield savings account, it’s common to come across promotional rates that seem too good to be true. Banks often use these attractive rates to entice new customers, but it’s crucial to understand the terms and conditions associated with these promotions.
Promotional rates are typically only available for a limited time, after which the APY may drop significantly. Before signing up for an account with a promotional rate, make sure you understand how long the rate will last and what the APY will be once the promotion ends. It’s essential to look for an account with a competitive permanent rate that will provide consistent growth for your savings over time.
Don’t be swayed by temporary high rates alone; instead, focus on finding an account with a solid, long-term APY that will help your money grow steadily. Carefully review the terms and conditions to ensure you’re making an informed decision that aligns with your financial goals.
3. Minimum Deposit Requirements:
When opening a high-yield savings account, it’s essential to consider the minimum deposit required.
Some accounts may necessitate a substantial initial deposit, while others have no minimum requirement at all.
If you’re in the early stages of your savings journey, it’s advisable to seek out an account with a low or nonexistent minimum deposit requirement. This will allow you to start saving without needing a large sum of money upfront.
4. Monthly Maintenance Fees:
Monthly maintenance fees can significantly erode your interest earnings over time, making it crucial to find an account that doesn’t charge these fees.
Prioritize high-yield savings accounts that don’t impose monthly maintenance charges, enabling you to maximize your interest income and keep more of your money working for you.
By avoiding unnecessary fees, you’ll be able to reach your savings goals more efficiently.
5. Minimum Balance Requirements:
In addition to minimum deposit requirements, some banks may stipulate that you maintain a certain balance in your high-yield savings account to avoid fees or qualify for the highest interest rate.
Before committing to an account, ensure that you thoroughly understand and are comfortable with any minimum balance requirements. Consider your financial situation and determine whether you can consistently meet these requirements to optimize your savings potential.
6. Ease of Access:
Accessibility is a key factor when choosing a high-yield savings account. In the event that you need to withdraw funds, you’ll want to ensure that you can do so quickly and conveniently.
Look for accounts that offer a range of withdrawal options, such as online transfers, mobile banking apps, or ATM access. Having multiple ways to access your money will provide peace of mind and flexibility when managing your savings.
7. Bank Reputation and Stability:
Before entrusting your savings to a financial institution, it’s crucial to conduct thorough research on the bank or credit union’s reputation and financial stability.
You want to have confidence that your money is in capable hands and that the institution will remain solvent in the long term. Look for establishments with a proven track record of financial strength, positive customer reviews, and a history of regulatory compliance to ensure the safety and security of your savings.
8. Additional Features and Benefits:
While a high APY is undoubtedly important, it’s worth considering the additional features and benefits offered by a high-yield savings account.
Some accounts may provide perks such as ATM access, mobile check deposit, or online bill payment services. Evaluate which features are most valuable to you and factor them into your decision-making process.
These additional benefits can enhance your overall banking experience and provide added convenience in managing your savings.
Other FAQs about High Yield Savings accounts:
Q: What exactly is a high-yield savings account?
A: A high-yield savings account is like a regular savings account but on steroids. It offers a much higher interest rate than your typical savings account, which means your money will grow faster without you having to lift a finger. It’s like giving your savings a little boost!
Q: How can I find the best interest rates for high-yield savings accounts?
A: To find the best interest rates, you’ll need to put on your research hat and do a little digging. Start by comparing rates from different banks and credit unions online. Don’t forget to check out comparison websites that do a lot of the legwork for you and can help you find the best rates out there.
Q: Are online banks a good option for high-yield savings accounts?
A: Online banks are often the way to go when it comes to high-yield savings accounts. Since they don’t have the overhead costs of traditional brick-and-mortar banks, they can offer much higher interest rates.
Q: Are high-yield savings accounts FDIC insured?
A: Most high-yield savings accounts are FDIC insured, which means your money is protected up to $250,000 per depositor, per account category. So even if the bank goes belly up, your money is safe and sound. It’s like a little safety net for your savings.
Q: Is there a minimum balance requirement for high-yield savings accounts?
A: It depends on the account. Some high-yield savings accounts have minimum balance requirements, while others don’t. It’s important to read the fine print and check the account terms before signing up, so you know exactly what you’re getting into.
Q: Are there any fees associated with high-yield savings accounts?
A: Sometimes, but not always. Some high-yield savings accounts might charge fees like monthly maintenance fees or fees for excessive withdrawals. But don’t worry; you can avoid these fees by doing your homework and reviewing the account terms carefully.
Q: Can I access my money easily with a high-yield savings account?
A: In most cases, yes! Most high-yield savings accounts let you access your money through online transfers, mobile apps, or ATM withdrawals. Just keep in mind that some accounts might have limitations on the number of withdrawals you can make per month. But overall, you should be able to get your hands on your money when you need it.
Q: How often do interest rates change on high-yield savings accounts?
A: Interest rates on high-yield savings accounts can change at any time, depending on market conditions and the bank’s policies. It’s a good idea to keep an eye on your account’s interest rate and be ready to switch banks if the rate drops significantly. Don’t be afraid to shop around and find the best deal for your money!