Factors to Consider When Choosing a High Yield Savings Account

It is one thing to save our extra cash, and a whole different scene when doing so in a high-yield savings account. It is important to note that saving money for investing in mutual funds (know about standard deviation, Sharpe ratio, R Squared, Beta, and alpha in mutual fund before making any investments) and saving it to put it in an account are two different things. While the first one ensures that we get some return on our investment, the latter guarantees we get maximum benefits for being financially disciplined. We can, of course, also make use of services like those offered by the best investment management companies out there in order to really understand where we should be putting our money.

It makes no difference if you are saving for a home improvement project, a new car purchase, or retirement planning on how you would live your life at a retirement community center like Preserve at Marsh Creek. In all cases, you may want to open an account with a bank that can provide you with greater interest rates.

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.

Pay Attention to the Interest Rates

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.

Consider Opening an Online Savings Account

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.

Hidden Costs on Bank Fees

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.

What About Access to the Money?

If we are going to save for an emergency or a future necessity, then we should be able to access the funds when the time comes. Otherwise, we end up in the same money fix that we are trying to avoid. For instance, if we are saving for a new house, then it needs to be withdrawn during the time when the builders from the firms Ware Design Build (https://waredesignbuild.com/upland-ridge-subdivision-new-berlin-wi/) start the construction process. If, at that time, the funds cannot be used, it would be useless to even have the money.

But that brings us to the question: 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.

Check That the Bank is Insured

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.

Customer Service is Also Important

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.