Managing your finances and saving enough is on everyone’s priority lists. Saving accounts are one such way people keep their stash of money safe. Not only that, because of high savings account interest rates, it is also a great way to grow your finances. Moreover, in case of economic fallouts, these savings can come in handy.
Apart from that, there are several other benefits of having a high yield savings account. Wondering what these are? We are here to help you. Below we have made a list of the benefits of a high yield savings account.
What is a high yield savings account?
Before we move on to the benefits, it is important to understand what a high yield savings account is. A high-yield savings account is one that mostly pays 20-25 times more than the national average of a standard savings account. Because of the gap between the national average and high-yield savings account rates, you can earn significantly from such accounts. Thus, these are preferred by many people over regular savings accounts.
Pros of a high-yield savings account
Now that you know what a high-yield savings account is, below are the benefits you can get by going for this type of account:
- You are always offered more earnings than your traditional savings account. So, even if the rates are around 1%, you will be getting more than the traditional savings account, which will be somewhere around 0.06%.
- These savings account compound interest every day, which means that you will be earning interest daily. Moreover, you do not need to start investing with much.
- Make sure that you are investing in an insured account, and your money will always be safe. So, the risk can easily be eliminated.
- You can access the money that is sitting in your account whenever you need it.
- The best high-yield savings account does not take in any additional costs, be it monthly fees or anything else. There are also either no or low minimum deposit or balance requirements.
- High-yield savings accounts are majorly online, which makes it even easier to tap into them whenever you need the money.
- It is also easy to transfer your money between a high-yield savings account and your other bank accounts.
What to look for?
To get the best high-yield savings account, there are certain things that you should consider. These are:
- Interest rate: The interest rate is one of the most crucial aspects of a savings account. So, ask about how much interest the account pays. These rates are usually flexible, but some banks offer promotional rates for a certain period of time.
- Required initial deposit: How much money is required to open an account?
- Minimum balance: What is the minimum balance required to keep the account going forward? Ask about a minimum threshold and consider if you would be able to maintain that in the longer run.
- Fees: Make sure you ask about all fees. Ask about how much they ask for the account and if there is a way to avoid that fee. Also, ask about any additional fees or violation fees.
- Link to other accounts: Consider what other links the bank provides. For instance, ask whether you will be allowed to create links with your other deposit accounts. You can also ask about links with brokerages. Make sure you ask about the restrictions as well.
- Deposit option: Deposit options are important, so ask the bank about whether they gave a smartphone app or not. It is best to go for a bank that provides the option to deposit your funds online.
- Accessibility: Make sure that you are aware of how accessible the account is. Consider how frequently you can withdraw funds and how you can withdraw funds.
- Compounding method: The compounding method depends upon the bank you are choosing. It can be daily, quarterly, semi-annually, or annually. For the highest benefits, you should go for a bank that compounds interest daily.
A high yield savings account is highly beneficial and can also take the place of your emergency fund. The only thing you need to do is consider all the terms and conditions carefully. Ask questions about the things mentioned, and only then open the account.