In today’s economic climate burdened byand , many people may be looking for new ways to save and protect their money. This can take many forms, from to and more. Like any financial product or service, however, it pays to do your research to get the most value.
High-yield savings accounts are no different.
While these accounts are currently offering exponentially more interest than traditional savings accounts (think 3.5% to 4.5% compared to 0.33%) there are some questions you should know the answers to secure the best account for your needs. In this article, we will break down the answers to three important questions you should know.
High-yield savings account questions to know
Are you considering opening a high-yield savings account? If so then be prepared to have the answers to the following three questions.
Do you want to use your current bank?
How committed are you to using your current bank or lending institution? If your bank even offers high-yield accounts (it’s possible they may not), it doesn’t necessarily mean that they will provide the best terms and rates. To getyou should first shop around to see what’s available. You may be better off using a different bank than the one you currently use for savings and checking.
Understand your goals and what you’re trying to achieve by opening a high-yield savings account. Then compare that to what your current bank is offering. In many circumstances, you may be better off opening a high-yield account with a different institution.
Are your comfortable using an online bank?
While banks with physical locations may offer high-yield savings accounts you may be better served by using aninstead. Online banks don’t have the costs or overhead of opening and maintaining in-person branches. Because of these inherent savings, they’re generally able to offer higher interest rates than their counterparts with brick-and-mortar locations. That said, you won’t have the ability to do any in-person banking with an online bank so if that’s important to you you may want to consider using a bank that has a local branch.
There’s no right or wrong answer to this question. But if the aim is to earn as much interest as possible then consider using an online bank instead.
You can easily explore your banking options here now or in the below table.
How accessible do you need your money to be?
Asimilarly to a traditional savings account. If you’re after a high rate and have to use an online bank to get it, however, it may not be as accessible as your regular savings account. Some account holders are fine with this but others may not be. It’s a personal question that you should have an answer prepared for before opening your account.
Also: If you’re fine not having easy access to your high-yield account, or if you’re not planning on using the money in it at all, then you may be better offinstead. CDs may offer than high-yield accounts and the rate will be locked in for the term (unlike high-yield accounts which vary based on market conditions and other factors).
The bottom line
High-yield savings accounts can both protect and grow your money in an otherwise volatile economic climate. To get the most value out of these accounts you should do your research and have the answers to a few important questions. Know if you want to use your current bank or if you’re comfortable using a different lender. If you’re fine using a separate lender then strongly consider using an online institution, as they may be able to offer you a higher interest rate than banks with physical branches. Finally, it helps to know how accessible you want your high-yield account to be. If you’re comfortable not accessing it frequently (or at all) then you may be able to make more interest by opening a CD, instead.