By Michael Esparza
In today’s economic climate, every penny counts. That’s why parking your savings in a traditional savings account might not be the best use of your hard-earned cash. Enter high-yield savings accounts, offering significantly higher interest rates than a traditional savings account. But with so many options available, choosing the right one can feel overwhelming.
What are High-Yield Savings Accounts?
High-yield savings accounts function similarly to traditional savings accounts, allowing you to deposit and withdraw funds easily. However, they typically offer much higher annual percentage yields (APYs), currently ranging from around 2% to over 5%. This means your money grows faster, giving you more bang for your buck.
Let’s say you have $10,000 that you want to save for a year. You have two options: a traditional savings account that pays 0.47% APY, which is the national average according to the FDIC, or a high-yield savings account that pays 5.10% APY, which is one of the best rates available from Bask Bank.
If you choose the traditional savings account, you will earn $47 in interest after a year, and your balance will be $10,047. If you choose the high-yield savings account, you will earn $510 in interest after a year, and your balance will be $10,510. That’s a difference of $463, which is more than 10 times the interest you would earn from a traditional savings account. The more you have in your account, the more interest you receive.
Why Consider a High-Yield Savings Account?
- Boost your returns: Compared to traditional savings accounts, high-yield accounts can significantly increase your interest earnings.
- Emergency fund: Keep your emergency fund readily accessible while earning a higher return than a traditional savings account.
- Savings goals: Save for specific goals like a down payment, tuition, or vacation with a dedicated high-yield account.
Things to Consider When Choosing a High-Yield Savings Account:
- APY: This is the key factor but remember rates can fluctuate.
- Minimum balance requirements: Some accounts require a minimum balance to earn the advertised APY.
- Monthly maintenance fees: Avoid accounts with monthly fees, as they can eat into your earnings.
- ATM access: Not all high-yield accounts offer ATM cards or widespread ATM networks.
- Account features: Some accounts offer bonus interest for meeting certain requirements.
Banks with Top High-Yield Savings Account Rates (as of January 29, 2024):
- Bask Bank: 5.10% APY, no minimum balance, no monthly fees.
- Affirm: 4.35% APY, no minimum balance, no monthly fees.
- Ally Bank: 4.35% APY, no minimum balance, no monthly fees.
- Bread Savings: 5.15% APY, $100 minimum balance, no monthly fees.
- Capital One 360 Performance Savings: 4.35% APY, no minimum balance, no monthly fees.
Remember: This is not an exhaustive list, and rates are subject to change. Always research and compare
different options before deciding.
Additional Tips:
- Shop around: Compare rates, fees, and features from multiple banks before choosing one.
- Consider online banks: They often offer higher rates and fewer fees than traditional banks.
- Read the fine print: Understand all terms and conditions before opening an account.
By choosing the right high-yield savings account, you can watch your savings grow faster and achieve
your financial goals sooner.
