Disclaimer:* These thoughts below are my suggestions only and I am not affiliated with these banks. All calculations are based off interest rates that stay the same and do not fluctuate.
High-yield savings accounts are still a rarity, even with current interest rates. It’s important to get your extra funds into high-yield savings though because it is passive income! I don’t mean that you’re going to get rich by putting your money into a high-yield account! However, your money will be working for you! My suggestion is to find an account that will make at least 4.00%. This isn’t hard if you know where to look.
I also suggest finding a high-yield savings that does not require a minimum balance to give you extra flexibility. If you decide to go this route, be aware of the fees associated with a minimum requirement. Fees can also affect the interest you earn, which would defeat the purpose of finding high-yield savings. Below I talk about several different types of high-yield savings and one that I use.
High-yield Savings choices
I have another tidbit for you. ALWAYS look for accounts that are FDIC (Federal Deposit Insurance Corporation) insured. The FDIC insures each depositor up to $250,000. You can increase your insurance coverage with joint ownership and beneficiaries, or structure your deposits at different banks to stay under this threshold.
Synchrony Bank
Synchrony Bank boasts a savings account with 4.75% APY (annual percentage yield) on all balance tiers. It also doesn’t require a minimum balance to open! This means, that if you have $5000 to put in a high-yield savings and don’t even touch it until a year later, you will have $5237! For not even touching it, thinking about it, etc. you have made $237 in interest!
American Express National Bank
This is another one that offers high-yield savings with no minimum balance requirement and no fees! Currently American Express is offering 4.35% APY on all balance tiers. This high-yield savings is a good option if you want to go with a bank that is more nationally known.
UFB Direct
If you want easy access to your funds UFB Direct offers a free ATM card. You can make free withdrawals at any of the 91,000 ATMs in their network as well! UFB Direct is linked to Intrafi Network deposits. This means, if you have more than what FDIC insurance will cover, you can take advantage of having your funds in the same bank, but in a network of other banks to keep it all fully insured.
Brio Direct
This high-yield savings does require a minimum opening balance of $5000 to start it but it only requires a collected balance of $25 a month to obtain the interest rate which is a whopping 5.35%! So compared to Synchrony Bank, you would make $267 in interest off of your $5000 rather than $237. So in my opinion, if you have this much to start an account with, this would be a no-brainer!
My personal high-yield savings account choice
Finally, the high-yield savings account that I have used for the past 6 years is Ally Bank. I was looking for somewhere to stash a little bit of savings that I had at the time. I also needed an account that was easy enough to get funds to and from, but not easy enough to where it is linked to my main checking account!
This essentially was my starter emergency fund, so I didn’t want to see it all the time. Even at that time, Ally still paid me a high-interest rate!
High-yield savings accounts were fairly non-existent when I first started this account. Even in 2018, I was earning 1.45% APY on all balance tiers. With any variable rate account, the interest rate fluctuated but it is now up to 4.35% APY on all balance tiers.
The other reason I recommend Ally is because I feel like they pay attention to the market. This in turn makes me a loyal customer because they are doing right by the customer. Each time the Federal Reserve increases rates, I immediately get an email saying my interest rate has increased as well!
High-Yield Savings Accounts (ending thoughts)
Ultimately, online banks that offer these types of accounts might not be for you. If you are a brick-and-mortar type person and like to see who you’re talking to on the phone, then check your local area for high-yield savings! CDs (certificates of deposit) might also be another route that you can go if you don’t need quick access to your funds.
I bank with a brick-and-mortar bank but like I’ve said here, I also have an account with Ally Bank. I will keep Ally for as long as I can, too because even now, I can’t find an interest rate this high unless I choose to open a CD. Most banks around me offer “specials” but it still means my funds are locked in for a specific amount of time.
Also, if you do have a higher balance in an account and banks are offering a higher rate, go back to your bank and see if they will match it. I know from my personal experience, that sometimes banks can match what others are offering.
