Your Cheat Sheet to High-Yield Savings Accounts
You work hard for the money you have, and when you’re trying to set some of it aside in a savings account, you should feel good knowing that your cash is accruing interest. But it’s hard to feel that great about it when your account could have an annual percent yield (APY) as low as 0.06 percent.
In fact, many of the nation’s biggest banks have savings interest rates as low as 0.01 percent, CNN Money writes. There are, however, accounts out there that will pay closer to a 1 percent APY. “That might not sound like anything to get excited about, but it could make a big difference depending on what you have saved. For a savings of $10,000, for example, moving your money to an account with a 1 percent rate would bring you $100 in interest each year — versus only $1 from an account with a 0.01 percent yield,” CNN Money says.
These accounts that have a higher interest rate are referred to as high-yield savings account. They offer you a higher interest rate, but typically come with a few restrictions as well.
The No. 1 benefit to high-yield saving accounts is the higher interest rates. There are also low opening balances and minimum requirements with some of them, making it easy to open a high-yield account. In fact, some banks only require $1 to open and don’t have a minimum balance requirement, Brass writes.
For those of you hoping to set up an automatic savings plan, high-yield accounts offer that too. Many offer the option to set up recurring transfers so you don’t even have to think about how much to set aside each month — it’ll be done for you. Just because it’s a different type of savings account doesn’t mean that setting it up is any more complicated. Many banks even have the option to let you set up your account online.