Ever feel like your money should be doing more for you? I know I do. Looking at how little my money is growing sitting in my traditional savings account is frustrating. That’s when I learned about another option: High Yield Savings Accounts.
Since these were new to me, and perhaps to you as well, I wanted to give you a guide to understand high yield savings accounts better!
What is it?
A high yield savings account is a type of savings account that has a higher interest rate than a traditional savings account. These accounts can pay 20 to 25 times the national average interest rate. These types of accounts are offered from a variety of different financial institutions.
While these interest rates seem small, they can have a great impact on the interest you earn on your money. For example, if you put $5000 into a traditional savings account at 0.1% you will get $5 at the end of the year. If you instead put your money into a high yield savings account with an interest rate of 2% up would earn $100. That’s a big difference!
Pros and Cons
Pros
–Earn more money! What’s not to love about having more money!
–Lower risk – High yield savings accounts can be covered by the FDIC and NCUA which means that if the bank or institution fails, your money is covered by insurance.
–Great for Emergency Funds – There are many different ways to use a high yield savings account. There are great for your emergency funds since you will get a great return on that money. Additionally, these accounts are great for when you are saving up for a big purchase like a car or a home
Cons
–Multiple Institutions – There is a chance that your current bank may not offer a high yield savings accounts, so you may have to find another institution to get one. If you don’t like having multiple banks/places where your money is, this may be a problem for you.
– Less Features – Another con to these types of accounts is that they are often offered by places that don’t have many other features. Things like a checking account and an atm card may not be offered and instead your access to your money may mainly be accessible digitally.
Where to buy
As with any financial decision, you should always do your research before making a change.
Based on what I could find right now, here are some places and current rates where you can find high yield savings accounts:
Affirm 1.00%APY
Chime 1.00%APY
ConnectOne Bank 0.90%APY
Here is a link to a complete list of accounts with the highest rates.
There you go, you learned something new today. A high yield savings account could be a great addition to your financial portfolio. Its a great low risk way to get more interest on your money compared to just putting it in the bank. And that is how you grow your income and make your money work for you!
Have you had any experiences with high yield savings accounts? Share them with the community in the comments below.
