A savings account is like a piggy bank where you put money to save, the only difference is your piggy bank cannot earn you interest amount. Now, let's talk about high-yield savings accounts, these are the accounts that make you earn more money by paying you more interest as compared to regular or traditional savings accounts. You can opt for a high-yield savings account to save for your emergency fund, retirement savings and other long-term goals like purchasing your dream home.
Are high-yield savings accounts safe?
These accounts are among the safest, earning you money with low risk. They offer flexible withdrawals, though some limit you to six withdrawals within a certain period. Ensure the account is with an FDIC member bank, insuring deposits up to $250,000.
How to choose the best high-yield savings account?
The first step is to look for available options and compare them so that you can get to know which is the best one where you should put your money. Here are a few questions that you must consider-
- Compare interest rates and APY from financial institutions, as some banks offer varying APYs based on your account balance.
- Interest compounds daily in savings accounts, allowing you to earn more compared to monthly compounding.
- Is there any minimum balance required to open the account or not? Some accounts need a particular amount of money while opening the account.
- Are there any fees? The fees are important to look for as they can take away the interest amount you are earning on your savings.
Types of High-yield Savings Accounts
High-yield savings accounts are designed to offer a higher interest rate than traditional savings accounts, making them attractive for those looking to earn more on their savings while still maintaining liquidity. Here are some common types of high-yield savings accounts:
1. Compound high-yield savings bonds: These are the bonds that deal in real estate backed by US treasuries and real assets that ensure security and reliability.
- Advantages: Higher returns with 8.5% APY, easy access to funds through website and app, often no monthly fees and you can withdraw your funds any time you want to.
- Considerations: You can choose round-ups to automatically invest your spare change, and set up auto-investing to deposit funds into your account weekly, bi-weekly, or monthly. You also have full control over the amount you want to invest.
2. Money Market Accounts (MMAs): Money market accounts are similar to savings accounts but may offer a higher interest rate, especially for larger balances.
- Advantages: Higher interest rates than traditional savings accounts, some liquidity with check-writing privileges and ATM access.
- Considerations: Minimum balance requirements may be higher than regular savings accounts, a limited number of withdrawals per month due to federal regulations.
3. High-Yield Checking Accounts: Some banks offer checking accounts that also pay high interest rates, similar to savings accounts.
- Advantages: Combines the features of a checking account (like debit card access and check-writing) with the higher interest rates of a savings account.
- Considerations: May have requirements such as a minimum balance or a certain number of transactions per month to qualify for the high interest rate.
4. Certificates of Deposit (CDs): CDs are time deposits where you agree to keep your money deposited for a fixed period (e.g., 6 months, 1 year, 5 years). In return, you receive a higher interest rate than regular savings accounts.
- Advantages: Guaranteed interest rate for the term of the CD, generally higher rates than savings accounts.
- Considerations: Limited access to funds until the CD matures (early withdrawal penalties may apply), may require a larger initial deposit.
In conclusion, savings accounts are essential tools for achieving short-term financial goals while earning interest on deposited funds. Compound Real estate bonds provide a secure way to accumulate savings with an impressive 8.5% APY.
