How to Take Advantage of High-Interest Savings Accounts

December 19, 2021

Let's be honest – saving money can feel…well, slow. Especially when interest rates on traditional savings accounts are incredibly low. But what if I told you there’s a way to actually grow your savings, even a little bit? It’s time to explore the potential of high-interest savings accounts!

What is a High-Interest Savings Account?

Simply put, a high-interest savings account is a type of savings account offered by banks and credit unions that pays a significantly higher interest rate than a standard savings account. Currently (as of late 2021), these rates are noticeably higher than the paltry returns you might find elsewhere. This difference can make a real impact over time.

How Do They Differ From Regular Savings Accounts?

Most traditional savings accounts offered by big banks currently pay interest rates hovering around 0.01% to 0.25%. This means your money isn’t really growing. High-interest accounts, on the other hand, are often offered by online banks and credit unions and can pay rates of 3%, 4%, or even higher – depending on the market conditions and the specific institution. The key difference is the rate at which your money earns interest.

How to Make the Most of a High-Interest Account:

Shop Around: Don't settle for the first rate you see. Several online banks and credit unions are competing for your business, and you’re likely to find a better deal. Compare rates, fees, and minimum balance requirements.
Consider Online Banks: Online banks typically offer higher interest rates because they have lower overhead costs compared to traditional brick-and-mortar banks.
Take Advantage of Promotional Rates: Some banks offer introductory rates for new customers. Be sure to understand the terms of these offers – they may revert to a lower rate after a certain period.
Automate Your Savings: Set up automatic transfers from your checking account to your high-interest savings account. Even small, regular contributions can add up quickly, especially with a higher interest rate. Think of it as ‘paying’ yourself interest!
Build a Larger Balance (Strategically): While not always necessary, a larger balance generally earns more interest. However, be mindful of any minimum balance requirements the account may have.

Important Note: Interest rates fluctuate based on the overall economic environment. What’s a high rate today might not be tomorrow.

Resources to Explore:

Bankrate: https://www.bankrate.com/savings/high-yield-savings-accounts/
Forbes Advisor: https://www.forbes.com/advisor/savings/high-yield-savings-accounts/

Don't let your savings sit idle! With a high-interest savings account, you can start building your financial future, one interest payment at a time.