Why you should open a high-yield savings account this December
December is a good time to complete a range of activities, from holiday gatherings with loved ones to travel to preparing for the new year and all that could come. One item many Americans may want to tack on their to-do list? Opening a high-yield savings account.
These accounts come with significantly higher interest rates than regular accounts do but they operate in virtually the same way. That said, the timeliness behind these account types is key, and December 2024 may be one of the better times to get started.
Not sure if a high-yield savings account works for you? Start exploring your options here to see how much more interest you could be earning on your money.
Why you should open a high-yield savings account this December
Here are three compelling reasons why you should open a high-yield savings account this month.
Interest rates are high
If you're familiar with the ongoing battle against inflation then you're likely familiar with today's elevated borrowing costs. But higher rates for borrowers also mean higher rates for savers and, right now, interest rates on high-yield savings accounts are the highest they've been in years. It's easy to find a high-yield savings account with a rate of 4.5% or higher currently, especially if you're willing to open an account with an online bank. Even a deposit of just $5,000 would earn more than $200 in interest in 12 months, making it worthwhile for savers, including those with limited funds.
Get started with a high-yield savings account here now.
Interest rates could drop soon
While interest rates have been ratcheted up numerous times in response to decades-high inflation, they won't stay that way forever, especially if inflation continues to drop lower. With inflation at 3.2% currently, it's still higher than the Federal Reserve's target 2% goal, but many experts feel that the goal will be reached soon. That means interest rate hikes may no longer be in play (the Fed kept them paused during their most recent meeting). And they could even drop sometime in 2024.
If that's the case, it makes sense to open a high-yield savings account now, while rates are still high and the returns are substantial. This is especially true considering that rates on these types of accounts are variable, meaning that they can and will change often. So, if you want to earn today's high rates as soon as you can, you should consider opening an account this month.
You're (likely) losing money
Have you checked your savings account statement lately? If the interest you accrued in the last month or two is difficult to find, that's because it's barely there. With the average interest rate on a regular savings account just 0.46% right now, according to the FDIC, you're essentially losing money by not having some (or all) of your money in a high-yield savings account instead.
Multiple accounts are offering 12 times the average savings account rate and you can apply for them right now, from the comfort of your own home. Just understand that the higher rates will almost always accompany those accounts opened with online lenders versus those with physical locations. But if you're comfortable using an online bank — and already do most of your banking online anyway — then an online high-yield savings account should be a natural transition.
The bottom line
With so many things to do and places to be in December, it can be overwhelming to add just one more item to your itinerary. But a high-yield savings account, for many, will be worth it, particularly when opened this month. By opening this account type now, you'll start earning today's high interest rates immediately, before a potential drop in 2024. And you'll stop losing money by keeping your funds in an extremely low interest-earning account like a regular savings account, all while maintaining the same accessibility and familiarity you already have with your regular account. And you can do it all online from your phone or tablet. Get started here today and start earning more interest on your money.
