Want to build those savings quickly? Don’t just pick your first bank. (iStock)
A solid savings account is important in adulthood. Not only does it help you achieve your goals (buy a house, take the vacation of your dreams, etc.), it also protects you in case of an emergency.
Saving a lot of cash can be difficult, but there are ways to make it easier. in short? Skip run-of-the-mill savings accounts and opt for high-yield accounts instead. You can start with the online marketplace Credible.
“High-yield savings accounts provide a safe and accessible place to store your money, but if your money is kept in checking or traditional savings accounts, it will be lost to inflation. You get a small return,” explains Eric Taylor, Director of User Experience. at Baro Bank.
6 factors to consider when choosing a savings account
If you’re looking to get a high-yield savings account, consider these six factors as you shop (tools like Credible can help):
- interest rate
- Online or in-store?
- Fees and restrictions
- insurance
- Access and Convenience
- customer service
1. Interest rate
To earn maximum interest and build your savings fastest, you need the highest possible interest rate. According to the Federal Deposit Insurance Corporation (FDIC), the national average for savings accounts is currently just 0.09% APY (Annual Yield). High yield accounts, on the other hand, earn up to 0.90% annually. This is noticeably higher, especially for large balances.
However, it is easy to be deceived by high interest rates, so you need to be careful. Some banks only offer these very high returns for a short period of time, after which rates drop further in line with market averages.
Credible will tell you the minimum balance requirement, APY, and whether the account is available in person, online only, or both.
“Make sure that the advertised interest rate is not a high entry rate that lasts for a limited period of time or that the advertised high interest rate is not just a portion of your holdings,” says South, Michigan. A financial planning center in the field.
What is the difference between a high yield savings account and a traditional savings account?
2. Online or in-store?
The most profitable savings accounts tend to be at online banking institutions. These banks have lower operating costs and are therefore able to offer higher rates.
Of course, online savings accounts have some drawbacks. You should be used to making transactions, receiving statements, and sometimes using customer service entirely online. If not, a brick-and-mortar bank may be a better fit.
Credible helps you find high-yield savings bank account providers and interest rates that will boost your savings. Check out the options currently available, from each bank’s minimum balance requirements to his APY.
Earn more interest on your money by opening a high-yield savings account
3. Fees and Restrictions
Each bank has different fees, requirements and restrictions. Consider fees such as transaction fees, overdraft fees, and annual maintenance fees first. Because these can hurt your account earnings.
Next, find out the account requirements. Need some balance? Am I limited to a certain number of transactions? Are there penalties for not queuing? Understanding these limits is important to choosing the right account for your finances.
When it comes to earning interest on your hard-earned money, let your high-yield savings account do the heavy lifting. Open a high-yield savings account today and start collecting cash.
4. Insurance
You will always need a bank insured by either the FDIC or the National Credit Union Administration (NCUA). This will protect you (and your money) in case the institution goes bankrupt. Both types of insurance protect up to $250,000 per depositor.
“Be careful with savings accounts that aren’t insured by the FDIC or NCUA,” says Ken Tumin, banking expert at DepositAccounts.com. Make sure you are an NCUA member credit union.”
Pros and Cons of High Yield Savings Accounts
5. Access and Convenience
Being able to get your hands on the money is also important, so ask the bank you’re considering how transactions and transfers are done. Is there a waiting period? Can I request a card for my account for easier access to my funds?
“If the account is for emergency savings, make sure the money is easily accessible,” Taylor said. Make sure your debit card gives you quick access to your savings.”
6. Customer Service
It would be nice if everything went smoothly, but that is not always the case. Make sure your bank of choice offers easily accessible customer service (phone, email, chat, etc.) and convenient business hours.
You should also check customer reviews to see what past customers have said about the bank. This gives you a good idea of how easy customer service works.
Conclusion
High-yield savings accounts are a smart way to save money, but don’t just pick the first one you find. Do your research, compare accounts, and consider each agency’s fees, insurance, rates, accessibility, and more.
Use tools like Credible to streamline the process and ensure the best possible rates.
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