Why Apple and other high-yield savings accounts are worth opening
Apple's new high-yield savings account has brought this type of deposit vehicle into the news recently. It's certainly worth taking a look at with a 4.15% annual percentage yield (APY), no fees and no minimum deposit or balance requirements. But it also highlights the appeal of high-yield savings accounts in general.
When it comes to building wealth, working toward short-term goals and saving for a rainy day, a high-yield savings account is often one of the best places to put your money. In this article, we'll explore why you should consider this type of account, whether you open one with Apple or another provider.
Explore current savings account rates here to see how much more you could be earning.
Why Apple and other high-yield savings accounts are worth opening
High-yield savings accounts offer many perks. Here are three of the biggest ones.
Interest rates can be 10 to 15 times higher
When you compare interest rates between high-yield and regular savings accounts, there's no contest. According to the FDIC, the average APY for a regular savings account is currently 0.39%. By contrast, a review of current high-yield savings account rates (including Apple's) shows these accounts can earn 3.5% to 4.5% or higher.
That's roughly nine to 12 times higher. In recent months, the difference has been as much as 10 to 15 times higher. Over time, this can add up to a significant amount of interest earned.
"Most of my clients have been so used to getting a few dollars or cents in interest from their bank or credit union that the hundreds or even thousands they are able to get now can make a big difference," says Dana J. Menard, CFP, RLP, CEPA, CDAA, founder and lead financial planner at Twin Cities Wealth Strategies, Inc. "These accounts come in handy for those who need liquidity but do not want to trade that liquidity for just a few pennies."
Ready to open a high-yield savings account? Review your options online now.
It's a safe place to keep your money
Your money is safe when you put it in a high-yield savings account. It's protected by FDIC insurance (for banks) or NCUA insurance (for credit unions) up to $250,00 per account per institution. Plus, while your earnings may fluctuate as APYs change, you won't lose a cent from your initial deposit amount or the interest you've earned to date.
Contrast that to financial vehicles like stocks, which put your hard-earned money at considerable risk.
"Whether it's saving for a car, down payment on a home, a wedding, those funds do not need to be put to risk in the market," says William Thompson, CFP and financial planner at Valor Wealth Partners, LLC. "I'm sure a great deal of people found this out the hard way in 2022. Imagine saving for a car, investing those funds, and losing 20% of those funds. You're not just having to make up that money, but you also have to make up time."
It's great for short-term savings goals
If you're saving for an upcoming expense like a down payment or vacation, keeping your funds in a high-yield savings account can help you avoid the temptation to dip into them, as you might if you kept them in a checking account.
"Sometimes having a separate account that is earmarked for a special purpose is helpful in maintaining discipline and not using funds for any other purpose," says Tim Melia, CFP, MBA, principal and financial planner at Embolden Financial Planning LLC. "If it's at an entirely different institution in a high-yield savings account, that may be more helpful in providing an additional step in the process to think about what the purpose of this money is and whether a person is using it for that purpose."
It's also great for an emergency fund
A high-yield savings account is one of the best places to keep your emergency fund. Your funds are available anytime you need them, and as long as you're mindful of any monthly withdrawal limits, you can access them penalty-free.
"One of the main benefits of a high-yield savings account is the flexibility it provides," says Jamie L. Lima, MBA, CFP, CDFA and founder and president of Woodson Wealth Management. "Unlike other savings vehicles, such as certificates of deposit (CDs), consumers can access their funds in a high-yield savings account at any time without penalty. This makes it a great option for consumers who want to save money for emergencies or unexpected expenses, but still want to be able to access their funds when needed."
The bottom line
The new Apple high-yield savings account is just one of many solid options out there. To find the right one for you, check out our list of the best high-yield accounts by APY and ask yourself a few key questions. Whichever account you choose, you can rest easy knowing you've put your money somewhere safe where it can grow without much effort on your part.
Start your search for a high-yield savings account by comparing current rates here.
