High Yield Savings Account

    Do I Need to Save?

    High Yield Savings Account
    High Yield Savings Account

    Irrespective of your financial status, you still need to put some money away for rainy days. It is very difficult to predict your life in the next few years. You may end up needing that cash you frivolously spent in the near future. The inability to predict the future gives us a reason to save money. It is essential to save money whether you earn millions or a few dollars. Putting away a few bucks every now and then can build up into something substantial. As much as it is vital to save, the place to save is also important. Saving your money should be rewarding. Interest rates can make a lot of difference in your savings. This is the reason why you should choose a savings account that yields high interest.

    Financial institutions that have deposit accounts that offer high interest rates are considered high yielding accounts. These institutions can be found online or at physical locations. High yielding accounts should have high Annual Percentage Yields (APY) APYs and zero or low fees. When you are looking for a high yielding account, you should consider the annual percentage yield of the account. Knowing the APY helps you to calculate the amount you will be earning as interest on your deposit. The APY is the compound interest you will earn in the course of the year. High APY means high earnings so it will be great to compare APYs.

    You should also check the requirements of the financial institution. Every financial institution has its requirements for opening an account. If you meet that requirement, you are good to go. If not, you should look at other options. You should also consider the minimum deposit required. Some banks require zero minimum deposit while others can request for deposit as high as $10,000. You should look at your budget and choose a bank whose deposit you can pay.

    You should also know how you can access your money when you save with the financial institution. Regulation D indicates that you can make up to only six transactions in a month. These transactions include phone transfers, account to account transfers, automatic transfers, debit or check transfers, and overdrafts.

    Aside from looking at these factors, you should also look at banks that are typically known as high yielding banks. We have compiled a list of these financial institutions. Check them out.

    • Synchrony Bank
      Synphony bank is one of the financial institutions that offer a high rate. This bank gives a whopping 1.85% APY. There is no minimum balance required and they do not charge any monthly fee. Withdrawals are flexible with their ATM service. Electronic transfers can take days, however, ATM withdrawals offer you the flexibility of same day withdrawals. You are not limited to the number of times you can withdraw in a month. Synchrony bank allows you to enjoy the benefits of saving with an online bank. For instance, the bank does not need to invest in infrastructure and furniture. The bank takes advantage of this to pay more in terms of interest rates to its customers. The bank also has a commendable customer service. You will be able to sort out your issues with their reliable online support in no time. You can also access their phone lines at any time of the day and even on weekends. You will also have access to three free wire transfers within one statement cycle. Unfortunately, this bank does not offer checking account services. You should also note that it is not a full service bank.
    • Marcus by Goldman Sachs
      Marcus by Goldman Sachs also offers 1.80% APY for saving accounts. There is no minimum balance and you do not need to worry about transaction fees. You have lots of deposit options, including deposit by check, wire transfer, and electronic transfer. You can also withdraw funds through wire or electronic transfer. Your deposits are insured by the FDIC. Maximum deposit is $1,000,000. The fact that Goldman Sachs operates online may be a disadvantage since some people want to save to banks that have physical locations. However, the fact that Goldman Sachs operates online has been beneficial to the bank. The bank has consistently maintained high interest rates because they can avoid some overhead cost. They do not need to invest in buildings, furniture, and all the cost that comes with running a business at a physical location. Goldman Sachs savings account is one of the most preferred high yield savings accounts because the it is easy to meet the entry requirements.
    • American Express Bank
      This bank is also highly rated in the savings market. This bank offers a variable APY of 1.75%. You do not need to pay monthly fees and there is no minimum deposit. Since there is no minimum deposit required, you can open an account with any amount, however, you will need to make a deposit within the first 60 days of opening the account. The FDIC insures up to $250,000 of your deposit. You have the option of linking this account to other accounts that are under your name. This helps you to manage all accounts on one platform. The shortfalls of the services provided by this bank include no checking account options and you cannot deposit your check through a mobile platform.
    • Barclays Bank
      If you are looking for a well-established bank with a lot of history, the Barclays bank fits that position. This bank has been operating for over 325 years now. The bank operates in several countries and it is one of the top bank in the United States. However, the bank only operates online in the United States. Barclay bank offers competitive interest rates for saving accounts. Savings account holders enjoy 1.75% APY and they do not need to pay monthly fees for the maintenance of their accounts. There is also no minimum initial deposit required. You also get to transfer funds to and from your account to other banks. You can do this online at your own convenience. You will also have access to your funds at any time. Unfortunately, because Barclays bank does not offer full service banking. It does not have a checking account option, or mobile app, and ATM network.
    • Ally Bank
      Ally bank also offers 1.75% APY and has no minimum balance requirement. You can access your funds via check, ATM, and debit cards. The bank also has an app that supports online funds transfer. This bank has many product options to suit your needs.
    • Citibank
      Citibank is also well known for offering one of the highest rates in the market. The bank pays 1.60% APY on new savings accounts. You will enjoy this rate for up to 12 months if you deposit up to $10,000.
    • Salem Five Direct
      Salem Five Direct operates an online platform. This financial institution is a division of the Salem Community bank called Salem Five Cents Savings Bank. This means that, although Salem Five Direct is an online division, its parent company operates at a physical location. This bank has been in operation for 150 years now and has proven to be able to successfully manage the savings of their customers. Deposits made at this bank are insured by FDIC, however, there is a legal limit. You get to enjoy 2.05% APY on your deposits. You do not need to pay monthly maintenance fees to keep your account active, however, the initial minimum deposit is $100. There are limitations on withdrawals due to Federal Regulations. You cannot withdraw more than six times in a statement cycle. If you decide to withdraw more than six times, you will pay $10 for each additional withdrawal.
    • NorthPointe Bank
      This bank made it unto this list even though it is a small bank. The bank offers customers 1.95% APY on the Ultimate Savings Account package. However, there is a condition attached to this attractive interest rate offer – you should have at least $25,000 in your account to enjoy this rate. If you can deposit this amount or more in your account, this option is an excellent option for you. This does not mean that people who do not deposit up to $25,000 do not enjoy interest on their deposits. If your balance is less than $25,000, you will earn 1.12% APY on your savings. You do not need to pay monthly fees but you will be charged $15 if you withdraw more than six times in a month. This bank also has a mobile app and you can easily manage your account through their mobile app. You get to enjoy a lot of convenience when you choose this account. You can do mobile check deposits and online bill payments. Their app is just what you need if you are someone who transfers cash a lot. You can even send money to someone through their phone number or email address. Unfortunately, this bank runs its promotions periodically. They change with time. This means the terms may change with time and you may no longer find it beneficial.
    • CIBC Bank USA
      The CIBC bank pays you 1.90% APY on your deposit. However, you will need $1000 to open the account. The bank does not charge monthly maintenance fees. However, you are limited to six withdrawals in a month. If you need to withdraw more than six times in a month, you will pay $10 for every additional withdrawal. The bank also has a mobile app and customers can easily control the account through their phones. The bank started its operations in 1991 and has accumulated over $25 billion in assets.
    • PurePoint Financial
      PurePoint Financial is another bank that is worth mentioning. This bank pays its customers 1.90% APY. However, you need to keep $10,000 in your account to enjoy this rate. It is advisable to save at this bank if you are confident that you can keep a balance of $10,000. If you cannot, you should consider other options. This is because, the bank pays an APY of only 0.25% if your balance is less than $10,000. You get to enjoy free monthly maintenance. you do not pay any fees but you will be charged to pay fees for making more than six withdrawals in a month.
    • Alliant Credit Union
      PurePoint Financial is another bank that is worth mentioning. This bank pays its customers 1.90% APY. However, you need to keep $10,000 in your account to enjoy this rate. It is advisable to save at this bank if you are confident that you can keep a balance of $10,000. If you cannot, you should consider other options. This is because, the bank pays an APY of only 0.25% if your balance is less than $10,000. You get to enjoy free monthly maintenance. you do not pay any fees but you will be charged to pay fees for making more than six withdrawals in a month.
    • Digital Federal Credit Union
      This credit union is ideal for people who are developing the habit of saving. This financial institution offers you a whopping 5.12% APY on balances less than $1000. This APY is paid only on Primary Savings Account. If your balance is more than $1000, you will have to consider other accounts. Deposits are insured by the NCUA. Customers have access to ATMs and they are not charged for using them.
    • Discover Bank
      Discover bank is mainly a credit card company but it has managed to offer a variety of products that gives you a unique banking experience. The bank’s savings account package offers competitive rates to its customers. The bank pays 1.75% APY to account holders and there are no terms and conditions for earning this APY. You do not need to have a certain balance at the end of the month to enjoy this rate. Even though this is an online bank, it offers a lot more service than most of the online banks. Discover bank provides checking account options and other consumer products. If you are looking for a brick and mortar banking institution, this may not be the bank for you. Since everything is done online. This means you cannot make cash deposits since there are no physical locations for you to transact business. The bank does have one branch which operates at a physical location though.

    Reasons Why You Should Open a High Yield Savings Account

    1. You Can Use It As Down Payment for Your Home
      Traditional mortgage loans require down payments. This down payment ranges from 5% to 20% of the loan. FHA loans require at least 3.5% down payment. You cannot raise this huge amount within a short period. You can, however, raise that cash faster with a high yield savings account. After saving by opening a high yield account, you can put up that account as a down payment for your loan. It is easy to access mortgage loans if you have a huge down payment.
    2. College Savings
      College requires a huge sum of money. If you have plans on going to college, and you do not have any cash stashed away for it, you can consider opening a high yield savings account. You can save up money with this account. The good thing about these accounts is that you can raise money fast since the interest is high. When it is time for you to go back to school, you will not worry about cash since you are financially ready to pursue your education. There will be no obstacles since you have all the funds to pay for your education. However, you will need to calculate the amount you need for the education and calculate how much you will be paying at the end of every month. You should also consider the period you have left to go back to college. If you have a short time left, you will need to save in huge sums or as little as you want.
    3. Vacation
      If you are planning a big vacation for yourself or family, you can start saving up for it. Once you decide the total cost of your vacation, you can set a savings goal. Then you can plan how much to deposit monthly or even weekly. Vacations are nicer when you do not have to empty your main savings accounts to have fun. Since that cash is dedicated to your vacation, you can have fun without looking back on the amount you spent.
    4. Emergency Fund
      Even if you do not have plans of travelling, furthering your education, or buying a new home, it is still a great idea to open a high yield savings account. The future is unpredictable and it will be safe to have some money stashed away for unforeseen circumstances. You cannot never know the amount of money you will need in the future because you cannot predict what you will need the cash for. However, you will be in a better position if you put away a large sum of money. Even if you do not have a huge sum to put in a savings account, it is still worth saving in a high yield savings account. The money will accumulate fast and you will have a security for those unexpected difficult times.

    Difference Between Traditional and High-Yield Savings Account

    Traditional savings accounts attract lower interest compared to the high yield savings accounts. You can expect an interest rate of 0.01% on your traditional savings account. However, high yield savings account attracts interest rate as high as 1.35%. The good thing is that both savings account types are insured by the FDIC.

    The accounts discussed above are the best high yield savings accounts in 2018. However, it is difficult to choose one particular bank as the best option among the rest. This because, everyone has his or her preferences. The needs of customers also differ and so what may work for one person may not work for another person. Hence, it is difficult to choose one bank that meets everyone’s demands. That is why it is important to go through all the options and choose one that actually works for you. Fortunately, we have also talked about some of the drawbacks of these accounts. These will help you to choose one that works for you.

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