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Some people call them high-yield savings accounts while others call them high-interest savings accounts. High-yield savings accounts are a powerful financial tool that combines the liquidity of a regular savings account with the potential for greater earnings. These accounts, offered by banks and credit unions, typically provide higher interest rates than traditional savings accounts, making them an attractive option for individuals looking to grow their savings while maintaining easy access to their funds.

Whether you’re building an emergency fund, saving for a specific goal, or simply looking to make your money work harder, high-yield savings accounts offer a secure and flexible way to watch your savings grow over time. High-yield savings accounts offer a straightforward yet effective means of maximizing your savings without the risks associated with more complex investments.

What we cover in this discussion:

How many people use high-yield savings accounts?

Not. Enough. Seriously, there is no downside to using a high-yield savings account, so people really ought to be using them for their short-term savings and rainy-day funds.

Do high-yield savings accounts beat inflation?

They do, right now! That has not always been the case, so it is understandable if you have never really thought a high-yield savings account made any sense. But right now, with interest rates quite high, we are seeing several banks offering interest rates that exceed the current level of inflation.

What is a high-yield savings account?

A high-yield savings account is a bank or credit union account offering notably higher interest rates compared to traditional savings accounts. It allows individuals to save money securely while earning competitive interest, making it an attractive option for growing savings without the risks associated with investment.

Does the bank brand matter?

Short answer, no. As long as the bank is FDIC insured, there is no benefit to a national bank brand or a name you’ve heard of before.

Pros of high-yield savings accounts

Surprise, surprise! The biggest single benefit to a high-yield savings account is that it has a significantly higher interest rate than you would get from a regular savings account or a checking account.

Your rainy day fund should be in a high-yield savings account

You know how you should have a rainy day fund saved up in case an emergency comes up? Well, that money ought to be in a high-yield savings account accruing more interest than it would if it were sitting in a regular savings account, or even a….checking account (gasp!)

The cons to high-yield savings accounts

There aren’t many cons to a high-yield savings account because a high-yield savings account acts exactly like a regular savings account, except that it has an interest rate above 3%. What’s not to like, right?

What to look out for when shopping for a high-yield savings account

When you are considering what high-yield savings account is best, you will want to watch out for minimum deposit amounts, withdrawal frequency limits, and fees.

Where to find a high-yield savings account

Some of the best interest rates are offered by smaller banks or online banks. You might not have even heard of the bank. So, how do you find the best high-yield savings account? Well, you go to The Yukon Project. This page will allow you to compare several options.

When does the interest rate change on high-yield savings accounts?

The bank will tell you how often they might change the interest rate on a high-yield savings account. Most banks only change the interest rate every 90 days.

Using a high-yield savings account is an easy win for your personal finances

There is really no reason not to always have a high-yield savings account…and maybe even more than one!

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Nathan Foley