How to open a high-yield savings account
It's always beneficial to save money. If you can do so by also earning interest that's a plus, particularly in the current economic climate. While inflation and interest rate hikes have hurt things like home buying and mortgage refinancing, they have boosted the appeal of certificate of deposit (CD) and high-yield savings accounts.
CDs are providing interest rates in the 3% to 5% range while high-yield accounts are offering rates between 3.50% to 4.50%, depending on the lender and other factors. Compare that to the average interest rate of approximately 0.33% that accompanies most current regular saving accounts and it's clear to see that now is a great time to open a high-yield savings account.
So how do you get started - and how do you find the highest interest rate for your money? That's what we will discuss in this article.
You can easily explore your local high-yield savings options here to see how much you could be earning or use the table below to get started.
How to open a high-yield savings account
High-yield savings accounts are offered by both online lenders and banks with physical locations, providing you flexibility in opening an account. Here's how to get started.
Shop for lenders and rates
As is the case with many financial products and services it pays to do your homework. You can do this by shopping around for lenders and rates before committing to a specific institution. There are many online lenders who would be happy to have your business so don't just sign up with the first offer you get. You may be able to find a better rate and better terms somewhere else.
Just make sure, as you shop around, to do an accurate comparison between lenders. So if you're willing to deposit $5,000 in a high-yield account make sure you get rates for that amount from every lender you look at. And look at the fine print and minimum deposit requirements, as fees and other penalties could ultimately eat away at your potential interest. It's easy to shop your local offers online here now or simply use the table below to see how much you could be earning.
Pick the institution
Once you feel that you've adequately shopped around you'll proceed with choosing an institution. It may be easy to use the lender you're currently banking with as they may offer favorable rates and terms to keep your business. This would allow you to transfer an account your currently using (e.g. a regular savings account) into a high-yield one. That said, don't feel obligated to use your current bank if you can earn more money elsewhere.
Complete the application
The application to open a high-yield savings account is similar to the one you would fill out for most other accounts. So be prepared to have the proper documentation available. This can include (but is not necessarily limited to):
- The full names of those on the account
- The Social Security numbers of the account holders
- The address or addresses of the account holders
- Government-issued ID (a valid driver's license or other state-issued identification)
- Employment details (annual income, employer name, etc.)
Fund the account
You will have different options for funding the account depending on the institution you choose. If you're staying with your current bank you can withdraw some funds from an existing account and use them to open a high-yield one. You can also withdraw all the funds from an account, close it and then deposit all or some of those funds into the high-yield account. If you're starting fresh with a new lender, you can fund the account with an electronic transfer from your existing bank or, depending on the new lender, you may be able to send a paper check to get started.
Explore your high-yield savings account options online now and start earning more interest.
Don't forget
High-yield savings accounts are generally easy to open and operate. But don't just set it and forget. Monitor the account's performance by downloading the institution's app for your phone and tablet. Keep an eye on the interest rates as they can fluctuate. If your account is liable to be charged fees then make sure you're being charged appropriately. And make sure that you have the appropriate relatives added to the account so that they have access to the funds should you be unavailable for any reason.
