A new year symbolizes a fresh start for most people, and many see it as a time to get serious about making financial changes to their lives. This might include cutting back spending or saving more for the future. But you may also want to evaluate the financial accounts you’re using and upgrade any that are no longer working for you.
If you don’t have a high-yield savings account yet, this is a great time to get one. Below, we’ll look at three benefits to owning one.
1. You could earn more interest on your cash
The annual percentage yield (APY) is the most obvious perk a high-yield savings account offers. Rates fluctuate over time, but right now, the best savings account interest rates hover around 4.50%. Meanwhile, plenty of brick-and-mortar banks are still sticking with a 0.01% interest rate that will pay you a few pennies a year at most.
How much you earn depends on your interest rate and your balance, but it’s possible to earn hundreds per year by switching to a high-yield account. You’d earn $45 in a year with a $1,000 initial balance and a 4.50% APY. If you’d stuck with a traditional bank account that has a 0.01% APY, you’d only earn $0.10 on your $1,000 after a year.
2. You could ditch maintenance fees
Most high-yield savings accounts are available through online banks, and they typically don’t charge monthly maintenance fees. This is because online banks don’t have large branch networks to preserve. This reduces their overhead costs significantly, and they’re able to pass that savings along to you in the form of higher rates and lower fees.
Brick-and-mortar banks usually can’t afford to completely skip maintenance fees, though many enable you to waive them if you confront certain requirements. You don’t have to settle for that, though. If you’re still paying to own your savings account, it’s a great time to think about a switch.
3. You could earn a bonus
Bank account bonuses are cash bonuses often worth hundreds of dollars that institutions give to new customers after they’ve completed a number of qualifying activities within a set time frame. These bonuses are more common with checking accounts, but there are some for savings accounts, too.
You shouldn’t pick a high-yield savings account just because it offers a bonus, though. After you earn it, you’re still going to be stuck with the account. But if you admire its APY and other features, a sign-up bonus could be the cherry on top.
How to find the right high-yield savings account for you
APY is probably going to be your biggest concern when choosing a high-yield savings account, but there’s no need to scour the furthest reaches of the internet to find the highest possible rate. That’ll probably just be wasted time, because the bank with the highest rate can change at a moment’s notice. Instead, look for a bank account that offers a competitive rate along with other features that are important to you.
Review its fee arrange to make sure there aren’t any maintenance fees or hidden charges you have to worry about. For example, if you strategize to make a lot of ATM withdrawals, you don’t want a bank that charges ATM fees.
Speaking of ATM access, not all savings accounts have this, so it’s crucial to seek out a high-yield savings account that does if you hope to withdraw cash directly. Otherwise, you’ll have to transfer the money to a checking account first before you can take it out.
Customer service is key, too. You may not call your bank that often, but if you have trouble accessing your online account or moving your money around, you may have to. You’ll have a much better experience if your bank has helpful staff and decent customer service hours.
And whatever you do, verify that the account you’re interested in has FDIC insurance. Banks usually state this in the footer of their websites. This ensures you won’t lose your savings if the bank goes under.
differentiate a few savings account offers before settling on one. You may not find any that check all your boxes, and that’s OK. Look for the one that has most of the features you’re looking for and then apply when you’re ready.
These savings accounts are FDIC insured and could earn you 11x your bank
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 11x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.
