Open a high-yield savings account to earn more interest on your money

If you’ve been looking at savings accounts, you may have noticed that there are a wide range of interest rates out there. If you want to grow your hard-earned money as quickly as possible, focus on a high-yield savings account, which offers significantly higher interest rates.

Leaving a traditional savings account may give you pause, but high-yield savings accounts are fairly low risk and will earn you more in interest. Here’s what you need to know.

If you want to earn more interest on your money and don’t plan on withdrawing it right away, consider switching to a high-yield savings account.

As the name implies, a high-yield savings account is a savings account with a significantly higher interest rate than a standard savings account – with some high-yield accounts offering rates as high as 20 to 25 times the national average, which the FDIC currently puts it at just 0.05%.

Let’s say you deposit $1,000 into a high-yield savings account with an annual percentage yield of 1.20% (APY is how much interest you earn in a year if you don’t add additional money or withdraw funds). If you don’t make any additional contributions, you’ll earn $12 in interest at the end of 12 months. Having these same funds in a traditional savings account with a 0.05% APY would yield a return of just 50 cents after one year.

If you want to save even more money, opening a high-yield savings account is a good bet. Let high-yield savings accounts do the work for you. Open one today.

Taking the following steps will help you find the best high-yield savings account for you.

Compare High Yield Savings Rates
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Rates can vary widely from one high-yield savings account provider to another, so take the time to compare your options. Look for an account with few or no administrative fees and FDIC insurance, which will ensure your money is fully insured (up to $250,000) in the event of a bank failure.

Customer experience is also an important factor, so read online reviews for customer feedback and check banks’ Better Business Bureau (BBB) ratings.

HOW IS A HIGH YIELD SAVINGS ACCOUNT DIFFERENT FROM THE TRADITIONAL?

Recommendations for how much you should save each month may vary, but a popular rule of thumb is to follow the 50/30/20 budgeting rule, where you divide your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings and debts.

To consistently reach your savings goal, consider setting up a direct deposit with your employer so that a portion of your paycheck always goes straight to your savings account.

Let your high-yield savings account do the heavy lifting when it comes to earning interest on your hard-earned money. Open a high-yield savings account today to start raising money.

You won’t get rich by stashing your money in a high-yield savings account, but this relatively low-risk savings vehicle can help you earn a little extra cash to use on debt, finance a vacation, or save for an emergency.

Plus, if online banking is your preference, a high-yield savings bank account is right for you. Many financial institutions that offer high-yield savings accounts operate online only. When you bank online, you can often get lower rates because there are no overhead fees (which traditional banks often charge).

There are some drawbacks to consider before applying for a high-yield savings account. Firstly, your bank can change the interest rate on your account at any time. (The same applies to a standard savings account). Rate increases or decreases are often tied to when the Federal Reserve makes changes to the federal funds rate.

4 THINGS YOU CAN DO TO SAVE MONEY IN MINUTES

Additionally, many high-yield savings accounts allow you to make only a limited number of withdrawals (sometimes one withdrawal per month) before you get charged a fee; many require you to maintain a minimum account balance to avoid monthly maintenance fees, and some require a large initial deposit. (It’s not uncommon to see minimum deposits as high as $10,000).

Still, all things considered, you’re much better off parking your money in a high-yield savings account than in a standard checking account — or stuffed under a mattress.

In an ideal world, we would all be accumulating savings, but unfortunately, that is not the reality we live in, especially in the context of our current economic crisis. (As of August 2020, 13.6 million American workers were unemployed, according to the Bureau of Labor Statistics).