Your Cheat Sheet to High-Yield Savings Accounts

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You work hard for the money you have, and when you’re trying to set some of it aside in a savings account, you should feel good knowing that your cash is accruing interest. But it’s hard to feel that great about it when your account could have an annual percent yield (APY) as low as 0.06 percent.

In fact, many of the nation’s biggest banks have savings interest rates as low as 0.01 percent, CNN Money writes. There are, however, accounts out there that will pay closer to a 1 percent APY. “That might not sound like anything to get excited about, but it could make a big difference depending on what you have saved. For a savings of $10,000, for example, moving your money to an account with a 1 percent rate would bring you $100 in interest each year — versus only $1 from an account with a 0.01 percent yield,” CNN Money says.

These accounts that have a higher interest rate are referred to as high-yield savings account. They offer you a higher interest rate, but typically come with a few restrictions as well.

Benefits

The No. 1 benefit to high-yield saving accounts is the higher interest rates. There are also low opening balances and minimum requirements with some of them, making it easy to open a high-yield account. In fact, some banks only require $1 to open and don’t have a minimum balance requirement, Brass writes.

For those of you hoping to set up an automatic savings plan, high-yield accounts offer that too. Many offer the option to set up recurring transfers so you don’t even have to think about how much to set aside each month — it’ll be done for you. Just because it’s a different type of savings account doesn’t mean that setting it up is any more complicated. Many banks even have the option to let you set up your account online.

Cons

Make sure you do your research when you’re looking for a high-yield account. Some accounts don’t have ATM, debit, or check-writing options, making it difficult if you need to access your money, according to Brass. If it’s important to you to have access to this account when needed, make sure it’s something you talk to your bank about.

While some of these accounts require a low minimum balance, others require a high-minimum before you start seeing the increased interest rates apply, according to About. There are accounts out there that require more than $1,000 before the high-interest rates begin to kick in.

Talk to your financial institution about whether there are minimum fees attached to the account. Some banks will charge a fee for not maintaing a minimum balance, or will even charge monthly or quarterly fees, Brass says.

Think Digital

Online savings accounts are typically able to offer industry-leading interest rates, Nerd Wallet writes. They also typically have fewer restrictions than a brick-and-mortar bank. Here’s a look at a few online accounts with high interest rates.

GE Capital Bank online savings: They offer interest rates around 0.90 percent, according to Nerd Wallet. “GE Capital Bank’s accounts are limited to savings and CDs, but the rates for both are extremely competitive. Their online savings account offers one of the highest yields nationwide. The bank also offers a few sleek online calculators to help quantify just how much your savings will earn in comparison with the national average rates.”

Barclays Bank online savings: Offering interest rates around 0.90 percent, Barclays offers one of the best savings account rates in the nation. It does reserve the right to close your account, though, if you have a balance of less than a $1 for over 180 days, says Nerd Wallet. Your transfer options include deposits through online transfer, standard mail, or you can make a deposit using your smartphone or computer.

Palladian PrivateBank online savings: CNN Money writes that this account offers an APY of 1 percent. You need to have a minimum $10,000 deposit, though, but interest will still be paid if the balance falls below that once you’ve opened the account. If your balance does drop below the $10,000 mark, you will begin incurring a monthly $10 fee.

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