High-yield savings account questions to know
In today's economic climate burdened by stubborn inflation and economic uncertainty, many people are looking for new ways to save and protect their money. This can take many forms, from high-yield savings accounts to certificates of deposits (CDs). For any financial product or service, however, it pays to do your research to get the most value.
High-yield savings accounts are no different.
While these accounts currently offer exponentially more interest than traditional savings accounts (think 3.5% to 4.5% compared to 0.33%), there are some questions you should ask to secure the best account for your needs. In this article, we will break down the answers you should know to three important questions.
Start exploring your high-yield savings account options here now and see how much more you could earn.
High-yield savings account questions to know
Are you considering opening a high-yield savings account? If so, be prepared to have the answers to the following three questions.
Do you want to use your current bank?
How committed are you to using your current bank or lending institution? If your bank offers high-yield accounts (it's possible they may not), it doesn't necessarily mean they'll provide the best terms and rates. To get the best high-yield account, shop around to see what's available. You may be better off using a different bank than the one you currently use for savings and checking.
Understand your goals and what you're trying to achieve by opening a high-yield savings account. Then compare that to what your current bank is offering. In many circumstances, you may be better off opening a high-yield account with a different institution.
Are your comfortable using an online bank?
While banks with physical locations may offer high-yield savings accounts, you may be better off using an online bank instead. Online banks don't have the overhead of opening and maintaining in-person branches. Because of these inherent savings, they can generally offer higher interest rates than their counterparts with brick-and-mortar locations.
That said, you won't be able to do any in-person banking with an online bank, so if that's important to you, you may want to consider a bank that has a local branch.
There's no right or wrong answer to this question. But if you aim to earn as much interest as possible, consider using an online bank.
You can easily explore your banking options here now.
How accessible do you need your money to be?
A high-yield savings account operates similarly to a traditional savings account. If you're after a high rate and have to use an online bank to get it, however, it may not be as accessible as your regular savings account. Some account holders are OK with this, but others may not be. It's a personal question you should answer before opening your account.
Also, if you're fine not having easy access to your high-yield account - or if you're not planning on using the money in it at all - then you may be better off opening a certificate of deposit (CD) instead. CDs may offer higher rates than high-yield accounts, and the rate will be locked in for the term (unlike high-yield accounts, which vary based on market conditions and other factors).
Check your CD options here to see if that's a better fit.
The bottom line
High-yield savings accounts can both protect and grow your money in an otherwise volatile economic climate. To get the most value out of these accounts, do your research and have the answers to a few key questions.
Know if you want to use your current bank or if you're comfortable with a different lender. If you're fine using a separate lender, strongly consider an online institution, as it may be able to offer you a higher interest rate than banks with physical branches. Finally, it helps to know how accessible you want your high-yield account to be. If you're comfortable not accessing it frequently (or at all), you may make more interest by opening a CD instead.
