High-yield savings account APYs are much better than the rates you'll find with brick-and-mortar banks. That's why it's tough to predict how much you'll actually earn in interest from a high-yield savings account in a given year. But there isn't much you can do about it either way. Sometimes, this is good news and sometimes it's not. Rates fluctuateĪll savings account rates can fluctuate over time. This can take a few days if the checking account is at another bank. Those who need cash often have to transfer money to a checking account first. Most savings accounts don't include checks and only a few have ATM cards. Though the money in a high-yield savings account is fairly liquid, withdrawing it can require some extra steps. Withdrawals might require a few extra hoops As a result, you could face penalties if you frequently move money out of your savings account. But some banks still haven't changed their ways. The government waived this at the start of the COVID-19 pandemic and it's yet to reinstate it. This was mandated by a federal law known as Regulation D. Withdrawal limitsĪll savings accounts - including high-yield savings accounts - used to charge customers fees if they made more than six monthly withdrawals. Here are some of the drawbacks to opening a high-yield savings account: 1. This means that the FDIC will reimburse you up to this amount if your bank goes out of business and is unable to pay you back. FDIC insuranceĪll the best high-yield savings accounts are FDIC insured up to $250,000 per depositor per bank. Some brick-and-mortar banks lag behind in this area. These include online portals and mobile apps that enable you to quickly view your account balance, transfer funds, pay bills, and more. Since most high-yield savings accounts are offered by online banks, they usually have pretty strong account management tools. That's why they're a great home for emergency funds and short-term savings. High-yield savings accounts keep your funds within easy reach, so it isn't too difficult to access them when you need to. As a result, online banks are able to offer more competitive interest rates to customers and charge fewer fees. These banks don't have branches and that makes their overhead costs much lower than brick-and-mortar banks' costs. High-yield savings accounts are almost exclusively available through online banks. Over the long run, this leads to more cash for you than you'd get if the savings account compounded monthly. This means that every day, you're earning interest on your money, though most banks only deposit that interest into your account once a month. Most high-yield savings accounts have daily compounding. Here's a closer look at some of the best high-yield savings account rates: (The exact interest earned would depend on many factors - like how often your bank compounds interest and whether or not your interest rate changes over the years.) Traditional savings account with 0.06% APY: $30 after 10 years.High-yield savings account with 0.60% APY: $308 after 10 years. With a high-yield savings account, you'll earn more interest on your savings over time.įor example: If you had $5,000 to save, here's how much interest you could earn in a high-yield savings account vs. Here are some of the benefits of choosing a high-yield savings account: 1. For more info, check out our guide to high-yield savings accounts. There isn't a clear cutoff that separates a high-yield savings account from a traditional savings account, though some of the best high-yield savings accounts can have APYs that are 10 times greater than brick-and-mortar savings account APYs. What is a high-yield savings account?Ī high-yield savings account is a savings account with an annual percentage yield (APY) that is well above the national average APY. Here's a closer look at some of the most important things to keep in mind. If you're thinking about opening one, take the time to weigh the pros and cons of high-yield savings accounts first to make sure one is right for you. High-yield savings accounts are quite popular these days, but they have their drawbacks, just like any financial account.
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