Your Guide to a High Yield Savings Account
- Berley B, MS
- Jan 9, 2023
- 3 min read
We will get straight to the point about High Yield Savings Account because you should not be wasting another second without one or several! High Yield Savings Account (HYSA), also known as Online Savings Account offers a way higher interest rate than your traditional savings account.
Why should you open a HYSA you ask when you already have a savings account with your bank?
The easy answer is FREE MONEY, and who doesn’t like that? Your traditional bank pays you zero to no interest on your checking account and pays you about 0.24% on your savings account. As of today, the average Annual Percentage Yield (APY) for a HYSA is 3%. Will you be rich from it? No, however, it is free money that you are parking/saving for an emergency, vacation, and gifts, etc.
How to choose a HYSA?
I’ll break it down in five steps:
1. Be sure it is a reputable bank that is insured by the Federal Deposit Insurance Corporation (FDIC)- a simple google search will let you know.
a) What does it mean for a bank to be insured by FDIC? It is basically an insurance provided by the Federal Government to protect your money (up to $250,000) in case something happens to the bank
2. Be sure to look at the interest rate (APY)- my favourite part
a) Let’s say you deposit $10,000 and never make another deposit on the account
b) The average APY right now is 3%, so the bank will be paying you $25/month, which is about $300 for the year
c) Again, will it make you rich? No! But it’s free money!
3. Be sure there are no hidden fees
a) READ FINE PRINTS
b) Some banks do charge a monthly fee for the account, so do check that
c) There are several free HYSA for you to be using one that charges you
4. Be sure to check if there is a minimum balance required
a) AGAIN, READ FINE PRINTS
b) Some bank will have a required minimum balance for you to benefit from the high APY
c) If you’re not sure, call their customer service
5. Remember, you will not have a physical card and will not have an actual bank to go to, therefore,
a) You must consider how accessible you want the money
b) Create a budget where you will not have to consistently transfer funds from your Savings account to your checking account
c) Just like your traditional savings account, you can only make 6 transfers monthly to avoid account’s closure
How do you find the best rates?
A simple google search will be the first step I recommend and compare them using the five steps above. A few of my personal favourites are listed below in no specific order:
1. American Express
APY 3.30% as of 1/9/2023
2. Marcus by Goldman Sachs
APY 3.30% as of 1/9/2023
3. SoFi,
APY 3.75% as of 1/9/2023
4. Barclays
APY 3.40% as 1/9/2023
5. Capital One- 360 Performance Savings Account
APY: 3.30% as of 1/9/2023
As of today, 1/9/2023, Bank of America Savings account’s APY is 0.01%. So, check your current bank, and see what your current APY is for your hard-earned money in your savings account that the bank is using. Hence, you sometimes cannot even access your own money because “their system is down”.
Remember, the first step to generational wealth is to understand how money works and make it work for you! Your credit card is not an emergency fund, so start building your emergency fund in a High Yield Savings Account.
That’s it for now loves!
Happy RICH year 2023!!!
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