3 Reasons to Open a High-Yield Savings Account in August

Chances are you’ve heard of high-yield savings accounts, even if you don’t have one. These accounts, typically offered by online banks, have skyrocketed in popularity in recent years.

You may be wondering why you’d bother moving your money to a new bank account if you don’t already have a high-yield savings account. Here are three reasons why it’s worth it.

1. You will earn much more interest

As you might have guessed from the name, high-yield savings accounts are distinguished by their annual percentage rate (APY) that is well above the current national average of 0.45%. Rates vary by bank, but some of the best savings accounts have APYs around 5.00%.

To put this in perspective, let’s say you have $10,000 to deposit and you can put it in a savings account earning 5.00% APY or an account earning 0.45% APY. The 5.00% APY account would earn you $500 in one year, assuming the interest rate remains stable throughout the year. The 0.45% APY account would only earn you $45 in that time.

2. You probably won’t have to worry about maintenance costs

Online banks that offer high-yield savings accounts typically have no management fees. They don’t have branches to maintain, so their operating costs are typically lower.

This may not be a major selling point if you maintain a high enough balance with your current bank that the maintenance fee is waived. But if you’re paying each month just to own your account, you can do much better by switching to a high-yield savings account.

3. You can easily move your money

Since online banks don’t have branches you can visit, they focus on providing convenient online tools. Most have robust mobile capabilities, allowing you to check your balance, transfer funds, deposit checks, and pay bills from anywhere.

While less common than checking accounts, some online savings accounts also include ATM cards for direct access to your money. This may be something to look out for if you don’t want to go through the hassle of initially transferring money to a checking account before you can withdraw it.

How to Choose the Right High-Yield Savings Account for You

The interest rate is the main criterion for most people when choosing a high-yield savings account, and for good reason. But there are a few other things to consider, too. First, check to see if the APR is available on all balances, or if you have to maintain a certain balance to qualify for the rate. Some accounts have tiered APRs based on the amount in your account.

Next, look at how the bank gives you access to your money. Some only allow you to transfer the funds to another account, which isn’t convenient for everyone. Make sure you’re happy with the options they offer.

If you want to do all your banking in one place, also look into what other types of accounts the bank offers. Some banks focus more on savings accounts and CDs and don’t have checking accounts. If you opt for one of these, you’ll need to link your savings account to an external checking account.

Choose a few high-yield savings accounts that you like, then compare their offers. If you have any questions, contact the banks directly. Then, when you find one that suits you, you can open the account online.

These savings accounts are FDIC insured and could earn you more than 10 times your money.

Many people miss out on guaranteed returns because their money sits in a large bank savings account earning virtually no interest. best online savings accounts could earn you more than 10 times the national average rate on a savings account. Click here to discover the best-in-class accounts that landed a spot on our short list of the best savings accounts for 2024.