Why now is a great time to open a high-yield savings account, according to experts

In today’s economy every penny counts, and one of the easiest ways to save your hard-earned money is to open one High Yield Savings Account. These accounts offer many of the same benefits Regular savings accountWith the added bonus of earning significantly more interest.

“High-yield savings accounts are an excellent short-term savings vehicle, offering higher rates than traditional savings accounts,” says Mark Stewart, in-house CPA at Step by Step Business. “They’re still a liquid investment, so they can be accessed at any time, although you’re limited to a certain number of withdrawals over a period of time. In addition to offering liquidity, they’re low-to-risk investments and are often FDIC-insured.”

While high-yield savings accounts are worth opening anytime, financial experts say they’re especially convenient now.

Check out today’s top savings rates here to see how much you could earn.

Why now is a great time to open a high-yield savings account, according to experts

All the experts we spoke to said now is an ideal time to open a high-yield savings account. Here’s why.

Rate is high

Interest rates are currently high thanks to a string Rate hikes by the Federal Reserve. While high rates are bad news for borrowers, who pay more interest on the money they borrow, it’s great news for savers.

“Interest rates on high-yield savings accounts haven’t been this high in more than 15 years,” says Francisco Ayala, CFA, CFP, MBA, financial life planner at Coleridge Group. “The last time the federal funds rate, which is tied to most savings accounts, was this high was before the Great Recession. Since then, consumers haven’t had a reasonable chance of earning a decent return on their liquid investments. Consumers pick up the financial equivalent of scraps off the floor. Not anymore; wherever you go.” Look there is a lot of yield.”

Savings Account Rate Regular savings accounts currently average around 0.42%, according to FDIC informationbut Top High Yield Accounts You can earn up to 5% APY or more. That’s more than 10 times — and that difference can add up quickly.

“If you have $50,000 just sitting in a checking or a brick-and-mortar savings account, and you move it to a high-yield savings account that pays 4.15% interest, you could earn more than $2,000 per year in interest. That’s all. For five minutes’ work!” said Alvin Carlos, CFP, CFA, financial planner and managing partner of District Capital Management.

Compare top savings account offers online now.

Inflation is high

Inflation It may have started slowly, but it has been a persistent problem for the past two years. And when inflation is high, your dollar is worth less. By keeping your money in a high-yield savings account, you can protect your savings from significant erosion.

“Over time, cash will always lose to inflation. Managing those losses so they don’t destroy your ability to achieve your financial goals is essential,” says Jason Preeti, CFP, wealth advisor at Unleashed Financial.

Preeti added, “For example, between 2010 and 2020, inflation was sub-2% and banks paid around 0.1% to 1% interest. This is not a catastrophic loss of purchasing power. From 2021 onwards, we see annual inflation of 6%. More than that. Most traditional savings banks haven’t adjusted their interest rates. Instead of losing 1% to 1.5% of purchasing power annually, many customers lose about 6%. Finding a high-yield savings account is essential so your hard-earned cash isn’t depleted.”

Don’t miss out on extra interest — open a high-yield savings account today!

They are quick and easy to open

Apart from the above benefits, Switching to a high-yield savings account Incredibly easy.

“Last time high-yield savings account rates were so high, consumers couldn’t move funds between banking institutions to get the best rate possible,” Ayala said. “Think back to 2006 when PayPal, PayPal, and other forms of electronic transfers were in their infancy or non-existent. You had to write a physical check and run it to a local bank that offered a higher rate, which you had to do a lot. To find out. research for. This process was very time-consuming for busy people.”

But technology makes the process of finding and opening a new account much more seamless. “Nowadays, I can shop for rates nationally and transfer funds from one bank to another within a day or two from my couch,” says Ayala. “Everything is fine [your] Fingertips have eased barriers to financial solvency from the past high-interest rate environment.”

Bottom line

Open a high yield savings Account is one of the easiest ways Increase your savings. And with today’s high interest rates and chronic inflation, you really are to lose If your money is in a traditional savings account.

“[High-yield savings accounts] There’s almost no risk and not very attractive returns,” says Mark Struthers, CFA, CFP, founder and financial advisor at Sona Wealth. “After more than a decade of ultra-low rates, savers are being treated well financially. This is a great opportunity for consumers to take advantage of the inverted yield curve and increase their emergency funds.”