Opening a high-yield savings account? Make these 3 smart moves
Amid recent uncertainty in the banking sector and stubborn inflation, many Americans find themselves looking for new ways to protect and grow their money. One of the most appealing ways to do this in today's high-rate environment is with a high-yield savings account. These accounts offer significantly higher interest rates than traditional savings accounts, giving account holders a unique opportunity to exponentially increase their savings.
An interest rate for a regular savings account currently hovers around 0.33%, while one for a high-yield account can be 3.5% or higher. In today's economic climate, you're essentially leaving money on the table by not having a high-yield savings account. That said, as with most other financial products and services, it pays to do your research to secure the most value from this sort of account.
Start by exploring your high-yield savings account options here to see how much more money you could be earning.
3 smart high-yield savings account moves to make
As you embark on the high-yield savings account, process be sure to make these three smart moves.
Shop around
Just like you shouldn't purchase the first house you see or the first car you test-drive, you shouldn't automatically sign up with the first lender that will let you open a high-yield savings account. Instead, shop around to find the best option for your needs and goals. See what your current institutions are offering (if they are), but also research competitors to see what kind of rates they're providing.
But don't get too hung up on interest rates alone. Read the fine print to see what kind of deposit you would need to make (and keep) to get the promised interest rate. And review any terms, conditions and fees or penalties that could eat into your earnings. You may make more money long-term with an account with a lower rate than you would with a higher rate and more exorbitant fees.
Start researching your high-yield savings accounts options online now.
Consider an online bank
The major appeal of high-yield savings accounts is the interest rate (and the amount of money you can earn due to that higher rate). So if you're committed to finding the highest rate out there, strongly consider using an online bank or institution. Because online lenders don't have the costs of opening and maintaining physical branches, they can typically provide higher interest rates than institutions with brick-and-mortar locations.
That said, you may prefer a bank where you can visit and receive in-person assistance. Just know that these banks may not offer as high of an interest rate as online banks. There is no right or wrong answer here. It all depends on the individual and what they're trying to achieve with this type of account. But if the interest rate is your priority, consider using an online bank.
Keep an eye on the rates
Once you've shopped around and found the right bank (whether it be an online one or one with a physical location), you can rest easy knowing your money is secure and growing. But don't assume it will automatically grow at the initial rate. Interest rates on high-yield savings accounts are variable and react to market activity and other factors. This means your rate could go up from what it was when you opened the account - but it could also drop.
So keep an eye on the rates to make sure your account is working for you as planned. If rates move in a way you don't like, and you ultimately prefer the stability of a set interest rate, a certificate of deposit (CD) account may be better suited for you.
You can explore your CD options here now.
The bottom line
In an economic climate plagued by nagging inflation and uneven stock market performance, a high-yield savings account offers an attractive way to protect and grow your money. To get the most value out of this type of account, you should first shop around to find the most applicable option for your goals and needs. If you're committed to finding the highest interest rate out there, strongly consider opening a high-yield account with an online institution. Finally, keep an eye on interest rates as these accounts have variable ones and what you think you could be earning may go up or down based on market conditions.
