Maintaining an emergency fund is essential for all of us to achieve financial stability, however, doing so can be a challenge at times, particularly with the current uninspiring savings interest rates at traditional banks. So, what’s the best route to efficiently save your money? The answer lies in high yield savings accounts. There are many options available in the market, so it’s crucial to select the right one for your needs.
A high yield savings account, to clarify, offers a higher interest rate compared to a conventional savings account. Traditional savings accounts usually offer interest rates ranging between .25% – .75%. Though high yield savings accounts previously offered significantly higher rates before the economic downturn, currently, they average around 1.90% – 2.40%. This is a significant improvement compared to conventional savings account rates!
Not all high yield savings accounts operate in the same way. Generally, they are administered by large banks and function entirely online, given the absence of physical branches. The good news is that most of them are insured by the Federal Deposit Insurance Corporation (FDIC), securing your money. However, this should always be verified before opening an account. Since they’re completely digital, getting access to your money may take a couple of days, so if immediate cash access is necessary, this might not be the best fit for you. The intention of this account, though, is as an emergency fund, which hopefully won’t require same-day access. A slight delay is a small price to pay for the substantial interest gained.
It can be overwhelming to choose from a sea of high yield savings accounts, so here are a few top picks:
1. VIO Bank – Current APY 2.42% with $100 minimum balance
2. Popular Direct – Current APY 2.40% with $5,000 minimum balance
3. TAB Bank – Current APY 2.40% with no minimum balance
– [list goes on]
Picking the right account depends on your individual circumstances. As an example, those starting to build an emergency fund should prioritize accounts with no minimum balance requirements. Many high yield savings account providers allow you to open multiple accounts which can be beneficial for managing different objectives, such as emergency savings, travel funds, or home repair reserves.
Another essential consideration when selecting an account is the ease of the account opening process. Some may require additional steps or time to open, it took me just around 10 minutes to open my accounts with My Savings Direct.
In conclusion, while hunting for the best high yield savings account, consider the following factors:
• Is it FDIC insured?
• What is the current interest rate?
• Is there a minimum balance requirement?
• How are the money transfers processed?
• Can you quickly transfer money?
• Can you have multiple accounts?
• How long does it take to set up the account?
Once you’ve defined these, you’re all set to enhance your savings! What are your preferred high yield savings accounts? Leave your recommendations here, we’d love to hear from you!
