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Should you open a high-yield savings account online?

Online banking institutions generally offer higher interest rates on high-yield savings accounts than banks with physical locations. Getty Images/iStockphoto

It always helps to make a little extra money, particularly during times of stubborn inflation and economic uncertainty. There are multiple ways to make additional income, from taking on a new part-time job to building a passive income stream. In certain circumstances, refinancing your existing debt can free up some much-needed cash. But if you're looking for a smart way to both protect and grow your existing savings, a high-yield savings account may be the way to go.

A high-yield savings account works similarly to a regular savings account but with a significantly higher annual percentage yield (APY). While most regular savings accounts rates hover around 0.33%, a high-yield savings account can offer rates exponentially higher (usually around 3.5% to 4.5%). 

One of the reasons high-yield accounts can offer so much more interest is that many of them are only provided by online banking institutions. But should you open a high-yield savings account online, or are you better off looking elsewhere? That's the question we will explore in this article.

Check your high-yield savings options online now to see how much more you could be earning.

Should you open a high-yield savings account online?

If you're looking to earn the most interest possible on a high-yield savings account then, yes, you should open a high-yield savings account online. Here's why: Online banking institutions are generally able to offer a higher APY than lenders with physical locations. Because online lenders don't have to deal with the costs and overhead of maintaining a branch (or multiple branches), they have more freed-up cash to pass on to account holders in the form of higher interest rates. 

That's not the only benefit of opening a high-yield savings account online, however. Most of these lenders also won't charge you maintenance fees or hit you with penalties (like minimum account balances). Online lenders also generally provide you access to a large ATM network, most of which can be utilized for free (meaning you won't be charged for using an ATM unaffiliated with the lender). Because of this robust network of ATMs, you may actually find your online institution is more accessible than a bank with brick-and-mortar locations.

So if you're looking to make as much money as possible (and don't want to deal with many fees), your best bet is to look for an online bank. Explore your options here now to see how much interest online banking institutions are offering.

Other considerations

While an online bank may offer you the best return on your deposit, there are other considerations that may make you think twice. Here are two to consider:

  • Limited personal assistance: Because there's no bank to visit, your opportunities to discuss your account may be limited. While some account holders are fine with limited in-person banking, others may prefer to meet with someone face to face. If you're in the latter group, you'll need to determine if the yield on these accounts supersedes your personal banking needs. 
  • Deposits may be difficult: Due to the online nature of many of the banks in question, it may be tricky to make a deposit directly into your account. In many cases, you'll have to deposit your cash into one account and then transfer it to your online high-yield savings one. This isn't a tremendous burden, but it's something to consider as it will affect how you access your money.

The bottom line

High-yield savings accounts provide an easy way to grow and protect your money. To get the greatest interest rate on these sorts of accounts, t strongly consider using an online institution. While they may not always be the most convenient (particularly if you value in-person interactions), they can generally offer higher interest rates than institutions with physical locations.

Evaluate your goals and banking habits. If your end goal is to earn as much money as quickly as possible, you may want to open your high-yield savings account online today.

Explore your options and learn more now.

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