There are plenty of places worth investing your money for long-term growth. But what about short-term savings? Shouldn’t you be able to earn a little something extra on that, too?
These accounts are typically offered by online banks and financial institutions with lower overhead costs, allowing them to pass those savings to customers through better rates. So: With all the high-yield savings accounts out there, how do you choose?
The APY represents your actual return after compounding interest. This aspect is no doubt your top priority. Even small differences in APY can significantly impact your earnings over time. Currently, the most competitive high-yield accounts offer between 4.50% and 5.25% APY.
Fee structure
No monthly maintenance fees
Free transfers between linked accounts
Since you’re probably housing short-term savings in one of these accounts, you’ll want to be sure you can access your money when you want to withdraw it to pay for your next family vacation or the new brakes the car will need this year. Consider how you'll need to use these funds:
Is mobile check deposit available?
How quickly can you transfer funds to your primary checking account?
Insurance protection
Read some reviews and ratings for the account's mobile app, customer service, and account opening process.
Minimum deposit requirements
Some of the top high-yield savings accounts right now
Let's take a look at how you might decide between some of the most competitive accounts on the market right now. I broke down some of the most popular options by their APY, as well as the factors that help minimize fees and ensure easy access.
APY: 3.80% (with direct deposit)
Monthly/overdraft fees: None
Capital One 360 Performance Savings
APY: 3.60%
Monthly/overdraft fees: None
APY: 4.10% (on balances of $5,000 or more)
Monthly/overdraft fees: None
EverBank Performance Savings
APY: 4.30%
Monthly/overdraft fees: None
As you choose the right account for you, there are extra strategies you can start practicing to really hack your savings.
Laddering your savings
Consider splitting your funds between high-yield savings accounts and certificates of deposit (CDs) to create a "ladder" that balances liquidity and higher returns. You can play around with this CD ladder calculator to see if it’s worthwhile for you.
Special promotions
The bottom line
Once you feel settled on a high-yield savings account option, don’t bop around chasing rates. It’s not worth switching savings accounts to go from a 4.1% APY to a 4.3% APY. The whole idea of having a savings account is to let your money work for you, not to have to bust a move to keep up with interest rates. And since rates fluctuate, you may find that your interest rate increases without you having to do a thing.
By prioritizing the factors most important to your financial goals—whether that's maximizing returns, minimizing fees, or ensuring easy access—you can select an account that puts your money to work for you. Remember that while rates can change with market conditions, the habit of keeping your extra cash in a high-yield account rather than a traditional low-interest option is a savvy move all around.
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