A high-yield savings account is a bank account predominantly offered by online financial institutions that pays ten times more than the average interest rate on savings accounts offered by traditional banks. In other words, high-yield savings accounts are generally offered by online financial institutions or banks. The main reason why these banks offer more interest rate on a savings account is that they have lower overhead as compared to credit unions and traditional banks.
These online bank accounts can afford to pay higher APY, and it is not surprising that high-yield savings accounts have become exceedingly popular, especially during downturns like the Covid-19 pandemic. People are nowadays relying on a high-yield savings account to prepare for future events like- a medical emergency, paying for a down payment, or planning for a wedding.
Life is unpredictable and often throws various challenges at us that we need to overcome. In this sense, a high-yield savings account often comes to the rescue. A high-yield savings account might not be a place to make a long-term investment, but it is rather a place meant for your emergency funds and major expenses. With utmost security and safety, it keeps the cash that you are going to pull out in a year, and the solution comes in handy to meet your emergencies. However, if you want to invest a certain amount of money after you build an emergency fund, you can consider putting it into a brokerage account.
Having a high-yield savings account is always a smart way to build emergency funds and save up for big life events while also protecting your money against inflation. Here are the primary benefits of a high-yield savings account that you should consider and more than a few reasons to have one.
The primarily discussed benefit of having a high-yield savings account is the fact they have higher rates of interest that can help you achieve your financial goals faster. It also helps you to meet emergencies with a lot of ease, and it is a great solution for your unplanned expenditure.
Liquidity of funds
High-yield savings accounts are incredibly accessible, and they allow you to withdraw money whenever the need arises. Whether it’s for your own medical emergency, taking care of a family member, or any other unexpected life events, a high-yield savings account is a lifesaver.
No Minimum Monthly Fee Requirement
A compelling reason to keep money in a high-yield savings account is that they generally do not have any monthly minimums or monthly fees. Due to their lack of overhead cost, high-yield savings accounts offered by online financial institutions have very low minimum monthly fee requirements, if at all.
Great User Interface
High-yield savings accounts come with a great user interface and ease of accessibility. They also allow you to transfer money from your high-yield savings account to other banks very easily. They have sophisticated websites that are curated with a lot of care and offer plenty of features and rapid responses.
Because the highest-yield savings accounts are online, they make it easy to manage your money on the go with user-friendly mobile banking apps. When it comes to high-yield savings accounts, you do not need to go to the bank anymore since everything is just a click away. Additionally, you can also access it on Sundays since all the processes are online, and with this, you no longer need to wait till Monday or weekdays for the bank to open, unlike brick and mortar banks.
Gone are the days of hiding cash under the mattress and it’s never too late to make a smart financial move by putting your money into an online savings account where the high-yield interest rates can help you double your money every year. It is true that every person has some major financial goals set for their future and savings accounts are a must-have. If you are still wondering if you need a high-yield savings account, it is perhaps the best time to reconsider your financial plans and kick-start this brand new year. The best place to start with your financial goals is by having your money in the right bank account that offers the highest interest rate on a savings account. The best choice you can make is to have a high-yield savings account that offers the best interest rate, unlike traditional banks. One of the best factors of a high-yield savings account is that it will typically beat inflation. There is no better place to park the money that you are saving than a high-yield savings account and it is highly recommended that you have one.