Want A High-Yield Savings Account? Here’s How To Choose The Best One
Most of us love to see a healthy bank account, especially when putting in months or years to meet our financial goals.
But did you know your cash is actually losing value by leaving it in a savings account?
Between bank fees and zero interest rates, traditional bank accounts could eat into your savings in no time.
So, is there a way to secure your cash and grow your bank account?
This is where high-yield savings accounts come in. Let’s dive deep into how these accounts work and how to choose one that makes your money work for you!
What Is A High-Yield Savings Account?
A high-yield savings account is largely similar to a traditional savings account. Most of them are FDIC-insured, have different online banking features, and will guarantee your money’s safety.
However, high-yield accounts take traditional accounts to the next level. Instead of the usual 0.43% APY, some high-yield accounts can go to 5 to 6% highs.
With these rates, you could easily beat inflation and grow your nest egg over time.
Are All High-Yield Savings Accounts The Same?
The last few years have transformed the banking industry.
Besides choosing from traditional big banks or credit unions, plenty of fintech platforms have been competing for customers by offering generous rates and other perks if you sign up.
However, not all high-yield savings accounts are created equal. As you shop around, here are some features to look out for:
1. Higher Interest Rates
Generous interest rates are the heart of every good account. The higher the rate, the more your money grows!
For example, say you’re with a bank account that offers a 1% interest rate, while another fintech platform provides 5%.
If you deposit $ 10,000, your old bank gives you $100 at the end of the year. Meanwhile, the second platform will provide you with a $500 boost. Talk about a huge difference!
However, always read the fine print. Some banks will use higher rates to get you in the door and drop after a few months.
Also, banks may compound interest differently from one another. Daily, monthly, or yearly rates can make a difference!
2. Ease Of Banking
With tech being part of our lives, seamless banking is a must. Before transferring your money, ask yourself if that platform meets your needs.
Can you manage your account online or on a mobile app? Or if you need to talk to someone, do in-person services or a number you could call?
The list could go on, but understanding your ideal banking experience could help seal the deal.
3. Low To No Minimum Balance Requirements
While some banks have a no-strings-attached approach with zero to minimal fees, some banks ask you to maintain a minimum balance to enjoy the high interest rates.
Always check out what this minimum is before committing to anything.
If you’re just getting started with your savings, plenty of high-yield accounts give you generous rates without the hassle of putting in a set amount each month!
4. Ways To Deposit Money
When you’re using a bank account, how you deposit your money can make or break your experience with it.
You’ll probably look for direct deposits, bank transfers, or mobile check deposits. Most banks and fintech platforms offer that for extra convenience, so you probably won’t have issues.
But if you use traditional methods like cash deposits or wire transfers, your options may be more limited.
The Bottom Line
Knowing where to put your cash can take some time. Plenty of platforms will offer decent rates, easy banking, and other helpful features to make banking easier.
But with some research, you’ll have no trouble finding a high-yield savings account that works for you! If you want to start with some of our suggestions, you can check out:
- SoFi at 4.60% APY
- Goldman Sach’s Marcus at 5.10% at the referred rate, then drops to the normal 4.50%
- Ally Bank at 4.35%
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