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High Interest and High Yield Savings Accounts
If you have paid all your bills and you have money left over at the end of each month, it makes sense to deposit that money into a high interest or high yield savings account. Money left over at the end of the month in a low interest or no interest checking account isn't really doing anything for you. Money placed in a high-yield savings account allows you to keep your money where you can easily get at it and make some money for you as well.
When it comes to making money work for you, a higher risk generally means a higher reward. Of course, there is also the risk of failure and loss of money. A high risk place for your money would be someplace like the stock market. With less risk comes more security for your money. These include checking accounts, money market accounts, certificates of deposit, and savings accounts.
A checking account offers easy access to your money, but little or no financial yield. Money markets and certificates of deposit yield interest but may also charge a fee for early withdrawal. A high interest or high yield savings account gives you easy access to your money and pays you interest.
Requirements for High Yield or High Interest Savings Accounts
These can vary widely from bank to bank. Some banks will use the term "high yield" or "high interest" with a regular savings account that just has a pretty good interest rate. Banks usually offer these type of accounts to certain valued customers who can make a significantly large deposit initially.
Some banks may require customers to keep a high balance over long periods of time, or have other types of accounts at their bank. Some banks will have a strict limit on how many times a customer can deposit or withdraw funds. Online banks and financial institutions are typically easier to work with because they have less restrictions than brick-and-mortar banks.
Search for the Best Rate
Start with your own bank and ask if they have a high yield or high interest savings account available. Although your current bank may offer a variety of savings accounts, they may not offer these type of accounts. Or they may not offer a competitive interest rate for high yield savings accounts. It is best to do your homework and find the best rate of return for your money. There are several online banks or banking institutions who can offer a decent rate for savings accounts.
These days, the better deals and interest rates are going to be found online. The big online banks will almost always be able to offer a better interest rate than brick-and-mortar banks and they offer some of the bells and whistles that other banks will not. Typically, the big online banks do not require a huge initial deposit.
Find out about any early withdrawal penalties or if there are a certain number of withdrawals that can be made in a specific period of time. Also find out about any minimum balance amounts that may adversely affect your interest rate. Make sure you know if you can convert your savings over to another financial option like a CD and if there are any charges for these types of services.
FDIC Insured
The Federal Deposit Insurance Corporation insures the money you deposit into an FDIC insured bank or institution. Your money will not be at risk if you make sure the bank or financial institution is insured by the FDIC. You may also want to check out each bank or institution individually as interest rates seem to change almost daily. People no longer need to worry about the old $100,000 rule for FDIC insured banks. The new FDIC insured limit is now $250,000.
If you need to deposit more than that amount, split it up so that no one named bank has more than $250,000. Also, some banks and financial institutions will charge fees or lower your interest rate if you put more than $100,000 into any one single account. Be sure and check with each institution for full details.
Take a Good Look a the Fine Print
It seems that banking fees are always going up so it just makes sense to be sure you are fully aware of all the fees and additional charges involved with high yield or high interest savings accounts. No one ever wants to read the fine print when it comes to agreements or contracts, but if you want o know what a bank is doing, or may do with your money, then you need to take time to read the fine print.
What About the Extras
Typically, a high yield or high interest savings account will have some sort of perk or extra something to provide an incentive to get your business. Getting a good deal on a high yield or high interest savings account is about more than just money. You want to know that they are going to make your life easier when dealing with your money and account.
Look at the time it takes banks to transfer funds especially from bank to bank. Sometimes a physical location in your area may be necessary, especially if you need services like getting a physical copy of a check printed. There are just some better available options if a bank is online and in town.
Other things to consider are the customer satisfaction rates of various banks. Does a bank employ helpful people that can get your questions answered and is that bank going to be helpful when you have difficulties or need assistance making financial decisions about your money? Also, take a good look at how easy or difficult it may be to use the Internet to do your banking, especially with online banks.
Before you make any decisions about your money, spend a little time considering just exactly what you want from your money. What are your financial goals? Will the money saved be for a short-term need or long-term? Make sure you know what you want from your money, and all the account details of the bank or financial institution to whom you will entrust it before depositing it into any savings account
