One of the simplest ways to save and actually make your money earn more money is by opening a high-yield savings account. With so many account options available, it can be difficult to choose. Research various accounts, and ask any questions you might have to ensure you open the best savings account available.
What Is a High-Yield Savings Account?
A high-yield savings account is a savings account that offers higher interest rates than traditional savings accounts, which enables you to make the most of the savings you have. You won’t find a specific rate that’s considered “high yield,” but generally, if it’s more than 1.00% APY, you’re getting a high-yield rate for your savings.
Unlike standard savings accounts with low interest rates, high-yield savings accounts offer a higher rate, which translates into a more impressive return on the money you save. Another benefit of these accounts is that they’re insured by the FDIC, so you’re guaranteed that up to $250,000 per account is safe and secure.
What to Look for When Choosing a High-Yield Savings Accounts
Before you open a high-yield savings account, make sure it meets some qualifications, so you don’t risk losing money in other ways. Here are some factors to consider when choosing the best account for your money:
- Look for an account insured by the FDIC. If the financial crisis taught consumers anything, it’s that banks aren’t invincible. Wherever you decide to open an account, be sure the institution is FDIC-insured or NCUA-insured if you choose a credit union.
- Choose an account with no fees. A great interest rate isn’t great if you lose your return to high fees, so do your homework and look for a savings account that’s free to own.
- Verify the bank has good reviews. Find out what other customers have to say about the financial institution’s service, technology, products and features.
- Find out about minimum balance requirements. A minimum balance is the least amount of money that you’ve had in your bank account during the whole month. If the account has minimum balance requirements, your balance has to meet the requirements during each statement cycle or you’ll owe a fee. You can avoid this by using an online bank; online banks typically feature great rates and other perks like no minimum balance due to a lack of overhead.
- Ask if there’s a required initial deposit. If you decide on a high-yield savings account, find out the initial deposit requirement. The lower the initial deposit requirement, the better.
- Check out the interest rates. High-yield savings account rates are an important aspect to consider because you need to know how much your money will earn. Keep in mind that sometimes it might be better to accept a lower rate if the fees and minimums are also lower. Make sure you review the annual percentage yield — how much money you earn on your deposit over the entire year, including compounding interest.
- Explore the monthly transaction limit. Many bank accounts limit the number of monthly transactions you make from an account, which can sometimes determine if you’re eligible to have the fee waived for your account maintenance. You need to be aware of how many deposits or withdrawals you can make each month.
- Confirm you’ll have access to digital banking. If you like to bank on the go, choose an account with mobile and online banking. Nowadays, it’s hard to find one without it.
Here Are the: 10 Best Savings Account Promotions Available Now
Where to Find the Best High-Yield Savings Accounts
When you’re comparing high-yield savings accounts, you’ll find the best rates at online banks because they have fewer overhead costs and can pass those savings on to customers. A high-yield online savings account is pretty easy to find, but not everyone is comfortable banking online. If you prefer a bank you can visit in person, check with local banks in your area.
High-yield savings accounts rates can help you grow your savings at a higher rate than those available for traditional savings accounts. When you search for a high-yield savings account, make sure you take into account factors such as the rate, account maintenance fee, minimum balance and deposit requirements, number of monthly transactions allowed, customer reviews and whether the institution is FDIC-insured. Then, open your account and watch your savings grow.
High-Yield Savings Account Rates at Top Banks
Review the chart for pertinent information about high-yield savings accounts from five popular financial institutions. Consider choosing one of these best high-interest savings accounts for your financial plan.