High-Yield Savings Accounts: 3 Things to Know Now

with Inflation, Market uncertainty and new concerns Banking sector After all, many Americans have taken a close look at their financial situations. Investments that once seemed safe may not be so safe anymore – and the prospects for relief look bleak.

In this environment, you need to explore new ways to save and protect your money. Fortunately, recent interest rate hikes haven’t been all bad — they’ve actually helped boost demand High yield savings And Certificate of Deposit (CD) account. Interest rates on these accounts are higher than in recent years and exponentially higher than what could be earned if you left your money in a regular savings account.

But that’s not all potential account holders should know. As with all financial products and services, it pays to understand the intricacies before opening an account when High-yield accounts are generally easier to manage There are still some considerations to make a fully informed decision. We will explore these three items in this article.

You can easily explore your high-yield savings account options to see how much more you can earn.

3 things to know about high-yield savings accounts

Here are three helpful things to know about high-yield savings accounts.

Interest rates are high

Most popular for high-yield savings accounts Their high annual percentage yield (APY). The interest rate on regular accounts is currently around 0.33% (depending on the institution used). Interest rates on high-yield accounts, however, range from 3.5% to 4.5% or more. This means that you can earn significantly more money by replacing your current savings account with a higher-yielding account.

How much more could you do? A regular savings account with a $5,000 balance will earn about $16.50 after 12 months at 0.33% APY. But a high-yield savings account with the same balance would make $175.00 The more you deposit the more you earn – and the interest you accrue will grow over time, making this banking option especially beneficial for those looking to grow their savings.

You can now compare interest rates and high-yield accounts online to find the best option.

Interest rates are variable

Although the interest rate on a high-yield savings account is many times higher than what can be secured with a regular account, potential account holders should clearly see the process. Interest rates on these accounts are variable and will fluctuate based on market activity. This could mean that interest rates will rise again – and so will your APY. But it could also mean that interest rates will stay where they are, or they could go down, meaning that your earnings will be limited.

That doesn’t mean high-yield savings accounts aren’t worth pursuing. Variable rates need to be factored in when trying to estimate how much money can be earned. If you’re looking for an account where the rate won’t change, a CD can be a good option.

You may have more options online

If you’re committed to opening a high-yield savings account, be sure to thoroughly research your options, both online and off.

You may have a better chance of securing higher interest rates with lower fees using an online banking institution than if you opened one of these accounts with a traditional institution with a physical location. Because online lenders typically have lower overhead than in-person locations they may be able to offer higher interest rates. That said, online lenders are exactly that – online. So you may not get the same experience or access by using a lender with a branch near you.

Weigh the pros and cons and closely review your personal financial situation. If your main focus is just to grow your savings then you may have higher interest rate options online. Learn more here now.

Bottom line

High-yield savings accounts offer potential account holders a safe and secure way to grow their money. While these accounts can be particularly attractive in today’s economic climate, to get the most value from them, potential account holders should understand how much interest they can potentially earn. They should also understand that interest rates are variable and subject to change based on market conditions. Finally, those interested in getting the highest APY out there should consider online banking institutions versus physical locations