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How much money should I keep in a high-yield savings account?

There is such a thing as “too much” when it comes to your high-yield savings account balance.


High Yield Savings Account Great place to save your money. They are safer than investing in the stock market, you can easily withdraw your money if needed, and you will earn more interest than a regular savings account. While traditional savings account interest rates currently hover around 0.33%, high-yield savings account rates can range from 3.5% to 4.5% or more. That means your money will grow faster the longer it stays in your account.

But while it’s always smart to save as much as you can, there is such a thing as “too much” when it comes to your savings account balance. So, how much should you keep in your high-yield savings account? We’ll break it down for you below.

See how much more you can earn with a high-yield account here now, or use the table below to get started

How much money should I keep in a high-yield savings account?

There are no hard and fast rules about how much money you should keep in your high-yield savings account. Your target amount depends on your financial goals and budget. That said, there are two big things to keep in mind when calculating how much your goal should be.

Consider your needs and goals

High-yield savings accounts are especially great for two things: building an emergency fund and saving for short-term goals, like a vacation or a new car. How much you set aside for both depends on your situation.

For emergency funds, experts recommend saving at least three to six months of living expenses. This includes essentials such as housing, utilities, food, healthcare and transportation. For example, if your average monthly expenses are $3,000, you want to save at least $9,000 to $18,000.

If you can rely on a partner’s income if you lose your job, you may move to the lower end of that range. But don’t play it safe and aim higher. Putting in more gives you extra breathing room for extended unemployment and any unexpected big expenses like medical bills.

For short-term goals, how much you set aside depends on how much you’ve budgeted for the goal. Only you know how much you can afford to spend on something like a new car while still meeting your other financial goals, like saving for retirement and paying off debt.

For other purposes, a different type of account may serve you better. For example, if you want to make regular deposits and withdrawals to cover day-to-day expenses, you’ll want a Checking account Because savings accounts often limit the number of monthly withdrawals you can make. For long-term goals like retirement, a 401(k) or IRA Serves you better as you earn more interest in the long run.

Also, diversifying your money in different types of accounts can help you maximize your interest and minimize risk. A high-yield savings account is a great financial tool, but it shouldn’t be the only one in your tool belt. If you’re in the market for a high-yield savings account, explore your rates and options here or using the table below.

Beware of FDIC deposit limits

The Federal Deposit Insurance Corporation insures deposits up to $250,000 per bank account. Depositing more than that will not happen Protected in case of bank failure. You can get around this limit by holding multiple accounts at different FDIC-insured institutions. This way, all your deposits will be safe in case of bank failure.

That said, if you have more than $250,000 you may want to put some of it into a product that earns a higher interest rate. Your high-yield savings account should have enough to cover a job loss or other unexpected expenses, but anything above that can grow quickly. Certificate of Deposit (CD), Money Market Account or the stock market. Weigh your short-term needs against your long-term needs to make sure your money works as hard for you as possible.

Bottom line

Savings is a fundamental part of any financial plan. Part of smart saving is knowing where to put your money. Too little in your account means you may be unable to weather a financial storm; Too much means your money can’t earn as much as it could. Carefully considering your needs and goals can help you strike the right balance Choosing a high-yield savings account and determining how much it will keep.

Start your search for a high-yield savings account now or use the table below to view your options

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