Should I switch to a high-yield savings account?

Should I switch to a high-yield savings account?

Well, as the name suggests, a higher yield savings account is the type of savings account that provides a higher interest amount as compared to any other average savings account. Generally, a higher yield savings account pays you around 21 to 26 percent higher than the average account.


How Does A Higher Yield Savings Account Work?


Apart from the high interest rate you will be getting in higher yield savings accounts, the process is quite similar to an average account. You deposit the money and get interest in your savings. That’s it!


However,, if you are opening a a high yield savings account,, you might get charged for withdrawal above the basic withdrawal limit.


Now, you might be wondering for solid reasons to open a higher yield account. Well, let’s jot down some of the major uses of a higher yield savings account.


A higher yield savings account comes in handy for the following occasions:



Weddings or vacation savings

Buying a car

Down payment for your home

Emergency fund


Factors To Consider Before Going For Any Higher Yeild Savings Account:


As we suggest time and again, before purchasing anything, it’s best to consider and compare the factors that will end up giving you the best results. And, of course, it holds true in the case of high yield savings accounts as well.


Different higher yield savings provide different interest rates, and the charges are also different, but one can easily catch up with the difference if they save a higher amount. In short, these two are not the only factors that should be considered. Here are all the factors that you should compare for a good higher yield savings account.


Interest Rate


Several banks are emerging these days, and they offer a promotional rate rather than a standard rate.


The promotional interest rate is just to promote the bank and is offered only for a specific period. Hence before investing in these banks, it’s best to confirm the time period as well as the maximum and minimum threshold amount to avail of the interest rate.


Required Initial Deposit


The second important factor that one must consider while opening a higher yield savings account is the required deposit amount. Don’t get influenced by the rate if the minimum investment amount is higher than your current savings. Instead, you can look for other accounts that might offer a bit lower rate but come under your budget.


Minimum Balance Required


Once you have considered the above-mentioned factors, you must check the minimum amount you have to keep in your account after the deposit. Please note that accounts charge fees if the balance is lower than the minimum balance required. Hence, before putting in your money, ensure you are comfortable meeting the required balance.




Is there a cost that will be charged for this account at the credit union or the bank? Ensure you know how to avoid these charges before proceeding with that particular higher yield account. Also, confirm the penalty that is charged for exceeding the nationally allowed limit of six withdrawals each month.


Deposit Options


Finally, you can also look into the deposit options that are available for the account. An account that has multiple deposit options like ATM, mail-in check, or mobile check deposit is usually the one you should prefer.


Compounding Method


Banks can compound interest annually, semiannually, quarterly, monthly, or daily. You might think that accounts offering compound interest in higher frequency will potentially raise your take-home income; comparing accounts by APY rather than yearly interest rate will already account for the compounding component.


Best High-Yield Savings Account Rates


  • LendingClub – 2.07% APY
  • Ivy Bank – 2.15% APY
  • BrioDirect – 2.15% APY
  • Fitness Bank – 2.20% APY
  • My Banking Direct – 2.20% APY
  • CFG Bank – 2.30% APY


Wrapping It Up:


A higher yield savings account comes with several benefits, including a better way to get interest without riskier investments. However, the amount you will earn from a riskier investment like mutual funds or stocks is way higher. But we would definitely say that higher yield savings accounts are worth it. Before making your choice, you just need to consider the factors stated in this article.

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