It is one thing to save our extra cash, and a whole different scene when doing so in a high yield savings account. The latter ensures we get maximum benefits for being financially disciplined. However, it is not easy to find a high yield savings account and more so now when the economy is trying to recover from the pandemic. You have to consider some factors, and here are my most recommended ones.
This is the most important aspect I look at when thinking about a savings account. Different banks offer different annual percentage yield (APY), with the current average standing at 0.9%. Although this percentage is relatively low, it is a considerable APY when the offer is consistent compared to a bank that will offer a higher rate for the first few months and then lower its rate below average.
It is still possible to find banks with consistently higher rates, and hopefully, the average will increase after the recession.
With more banks opting to have traditional and online operations, some banks choose to go entirely online. Such a move reduces operation costs making banking services much cheaper. The action also allows banks to offer higher rates, especially for people with a savings account.
Before choosing to open a savings account with your traditional bank, I’d recommend you shop around for reliable online banks. Ensure your choice has FDIC insurance for your security.
When saving money for a rainy day, I do not expect to use the same money, even on bank charges regularly. This is why I recommend that one goes for a savings account with zero ledger costs. Information on bank charges is often in the terms and conditions; therefore, I carefully read through this.
For most banks, opening a savings account is free as long as you deposit the minimum amount. There are no maintenance charges as long as I keep the money above the minimum. This means, even if I plan on withdrawing some of the capital, I should never go below the cut off as this will turn into an expensive save.
If we are going to save for an emergency, then we should be able to access the funds when a crisis happens. Otherwise, we end up in the same money fix that we are trying to avoid. Once again, how often one can withdraw from their savings account is outlined in the terms and conditions.
In addition to that, I ask the bank tellers for more information, such as will the account be accessible online, can it link to a debit card, and will I be able to use an ATM card for access? However, this also depends on the reason why I opened the account. If it’s a fixed savings account, I do not mind having restricted access to my funds. This only means I need to be disciplined and only use the access when needed.
Part of a high yield savings account is that our money won’t one day get lost, with the bank having very little to do with its recovery. To safeguard customers from such risks, the government mandates that banks are insured with either the FDIC (Federal Deposit Insurance Corporation) or the NCUA (National Credit Union Administration). I insist that it is your responsibility to check if your bank is insured; else, you won’t have anyone to blame when things go under.
We usually overlook the essence of a bank’s customer service. In contrast, it is the department that will quickly give you peace when something goes wrong with your account. Good services mean we can ask as many questions as needed and swiftly get detailed responses. Therefore, check that your bank’s customer service is reliable by going through its reviews.
Smart individuals save for a rainy day, but more intelligent people save where their money will yield more fruit. This is why one needs to take their time before settling on a savings account, as it might determine your money’s future value.