What’s the difference between high yield and regular savings accounts? The answer is simple. A high yield savings account earns far more interest every year.
Traditional banks have big overheads, but this isn’t the case for online banks and financial services. This is why your local ‘brick and mortar’ bank might only be offering 0.05% interest. A high yield savings account with an online bank or financial service, however, could offer ten times more.
So why do so many of us stick with our bank and its regular savings account?
Many of us worry that high yield savings accounts will prevent us from withdrawing money when we need it. Or we fear incurring large fees. But that doesn’t have to be the case. Do your homework, explore your options, and you can make your savings go further.
Here are some tips if you are looking for a high yield savings account.
Know what you’re saving for
Do you need an emergency fund put aside? Are you saving for a holiday, a car, or a house? There are plenty of reasons why we want to put our hard-earned money into savings. When comparing high yield savings accounts, it’s helpful to know what you’re saving for, how much you want to save, and how often and quickly you’ll need to access your money.
Shop for the best interest rates
Comparing interest rates used to be a pain – calling up endless banks and reading through complicated documents. But in the digital age, you’re a few clicks away from discovering the range of great interest rates on offer today. Take your time and shop around. You will be amazed at the higher interest rates once you step away from traditional banks.
Check the details
Even though the internet makes it easier than ever to compare savings accounts, it’s still worth checking the fine print. Some points to consider include: what is the required initial deposit? What is the minimum balance? How often can you withdraw money? And, importantly, are there any fees? There are plenty of high yield savings accounts out there with low initial deposits, low minimum balances, and sometimes zero maintenance fees, but this is always worth double checking before you open an account. Do your homework and read the fine print if you want to make your money go further.
Look out for introductory offers
It’s easy to be blinded by introductory offers when looking for a high yield savings account. That’s why this is last on this list. That said, many banks and financial services have great introductory offers, such as short term interest boosts, that make it worth choosing them. Look out for these and compare them with the account’s rates, fees, and the other details highlighted above. If these all check out and work for your saving goals, it’s time to make the most of those sweet introductory offers.
It’s easy to let your fears prevent you from aiming for a high yield savings account. But those big interest rates aren’t just for the wealthy, most anyone can open a high yield savings account.