![]() ![]() Many of them are likely to be online banks, but some credit unions offer high-yield savings accounts too. Pick the right financial institution: There are many institutions to choose from for high-yield savings accounts these days.Ensuring you understand fully what your institution of choice requires ahead of time can help get any necessary funds ready before you need them. Others may not have any immediate funding requirements. Understand deposit requirements: Many banks require an opening deposit with a new savings account.Evaluating the fees associated with the account, such as the monthly service fee or withdrawal limit fees, can help illuminate the costs that might come with parking your money in a particular institution. Know the fees: Similarly, keeping in mind all fees associated with the account can give you a clearer picture of how your money might grow.Just remember that going by APY, which considers compounding frequency alongside interest, can provide a clearer picture of real returns than an interest rate. Look for the best interest rates: When searching for a high-yield savings account, it may seem obvious to prioritize higher interest rates.But, like opening any new bank account, keeping a few key considerations in mind can help keep things running smoothly. Opening a high-yield savings account can be exciting the prospect of a higher-than-usual rate of return is, for some, well worth the potential inconvenience of operating accounts across multiple institutions. Tips for opening a high-yield savings account This is assuming you don't make withdrawals from the account. ![]() You then start to see the potential rewards of compounding. Depending on the rate of compounding frequency, which is determined by your account type, and also depending on your interest rate, your money could grow faster. As a savings account accrues interest, it gradually increases the total principal - increasing the amount of interest earned on the next term period. Compounding is, essentially, earning interest on interest earned. The main attraction of a high-yield savings account is its ability to compound interest with an interest rate higher than that of a traditional savings account. This higher rate of return may help reduce the impact from inflation. One of the main reasons someone may open a high-yield savings account is because the interest rate is typically higher than a standard savings account. May help reduce the impact from inflation That said, there are some important advantages that, in the eyes of some, might outshine any potential downsides. There’s no right or wrong answer when asking, "Is a high-yield savings account worth it?" Indeed, the benefits of a high-yield savings account may be worthwhile to one person and outweighed by the potential drawbacks for another. Although Chase currently doesn’t offer a high-yield savings account, we’ll cover the reasons why you may want to open one of these accounts. Nonetheless, if you don’t mind the inconvenience, the higher rates of a high-yield savings account may be worthwhile. Those that do offer these services, may require the account to be opened as a "bundle" with another account such as a checking account or a certificate of deposit account. Some online banks that typically offer competitive high-yield savings account rates may not offer many of the usual services of a brick-and-mortar institution, like checking accounts, ATM cards or traditional deposits. This lower overhead lets online banks offer some unique perks, like waiving common fees and, sometimes, no minimum deposit requirements.Īs attractive as these perks can be, they may also be accompanied by a few key drawbacks. Typically, high-yield savings account rates are offered by online banks that operate without brick-and-mortar locations or the physical staff required to maintain them. They are oriented for long term savings, allow for regular deposits, and withdrawals, but may have monthly withdrawal limits, and are protected up to $250,000 at FDIC insured banks.Īside from their higher interest rates, high-yield savings accounts can sometimes come with a few other differences. How does a high-yield savings account work? High-yield savings accounts, in most other respects, work just like your usual savings account. A high-yield savings account may offer a higher rate of return than a traditional savings account, with an annual percentage yield (APY) often several times higher than usual. ![]()
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