What is a High Yield Savings Account?
A high yield savings account is an account that typically pays 20 to 25 times the national average. Consider that the national average is 0.10 APY. If you hold $1000 in the account for a year, you'll earn only $1 on that money. But with a high yield account of 2% APY, that same money would earn you $20.20. When weighing the options, a high yield savings account can be a wonderful addition to your financial portfolio.
So how do you take advantage of these earnings? Most of the time you'll find high yield savings accounts offered from online banks. The downside is that your checking and savings accounts will be held at different institutions, as usually these online banks don't have many other financial product offerings. Many people are accustomed to keeping their financial accounts housed at the same bank, so getting comfortable with a different setup may be difficult.
However, due to the ease, speed, and cost-free nature of today's electronic transfers, the inconvenience of cross-institutional transfers between checking and savings is greatly mitigated.
When should you utilize a high yield savings account? They are a great option for financial assets you won't need to access frequently or immediately. That could be an emergency fund, extra cash, or savings accounts for something specific, like a vacation or a new car. If your money is going to be sitting relatively long-term, it makes sense to keep it in an account that will return for you as much as possible.
Again, high yield savings accounts are a great option for you if you're looking for something with a higher than normal interest rate. The rate of return your money will earn depends on the specific account you choose and how much money you deposit there. So, ensure that you take some time to shop around before choosing an institution and an account.
Finding banks that offer high yield savings accounts is easy with Bundlefi. Our online account finder tool will help you quickly and easily compare various accounts and lead you directly into the account opening process once you make your selection.