High yield savings accounts are in limelight. They are instruments for better interest rates than traditional bank saving accounts.
These savings accounts are essentially the same as typical savings accounts with a distinction of offering a higher interest rate.
Of late, the attraction of high yield savings accounts has multiplied. The uncertainty bred by the COVID-19 pandemic has induced financial stress in the personal finance calculus of many people. The stock market keeps a cyclical pattern of rise and fall, job loss happened in many sectors and many individuals are out of work.
This has led to the financial wisdom of keeping one’s cash for better returns without any extreme risk of investing. That logic is drawing people to a high-yield savings account.
Of course, APYs have plunged in high-yield savings accounts after the Fed chopped interest rates in response to COVID-19. Still, high-yield savings accounts bring 20 times more interest than ordinary bank savings accounts. It is an easy and safer path to earn money on your deposit in a predictable way.
Why higher returns than big banks
Most high yield savings accounts are run by online banks. They have no baggage of big overheads compared to titans like Bank of America and others who operate on a bigger scale.
As a result, online banks pass on the savings to the customer as a higher interest on the depositor’s money. According to a report in Yahoo finance, many online banks offering benign interest rates because of minimal overhead costs compared to brick-and-mortar banks.
Brian Karimzad, founder of MagnifyMoney notes that rates are not worth predicting. But competition among banks means someone will have a better rate to offer. He says most people who earn nothing can turn to a high-yield account for making substantial savings.
Many banks are also offering a bonus. Bonus plus high APY (annual percentage yield) is a heady cocktail for investors. There are at least 10 banks offering high yield savings accounts.
They include CIT Bank, Axos, Marcus by Goldman Sachs, American Express, Barclays Bank, MySavings. PenFed, Discover Bank, Capital One, and UFB Direct.
The CIT Bank Money Market Account offers one of the highest interest rates with an easy to use platform. The interest will cover the entire balance, and there is a low minimum to get started.
The Axos High Yield Savings Account can be started with a $250 minimum. It can earn up to 1.10 percent APY with the attraction of no monthly account minimums or maintenance fees.
American Express Amex Personal Savings also pays top rates and is consistently near the top and does not change much. To open the account only $1 minimum is required and no monthly account maintenance fees are charged.
Marcus by Goldman Sachs
Marcus by Goldman Sachs is very popular with consistently high-interest rates, no fees, and no minimums. Transfer limits are generous to allow money to go in and out of the account. It will not allow a mobile check deposit.
Barclays Bank has standard online savings account highly comparable to the best in any group. It has no minimum balance requirement to open an account. They do not charge any monthly fees.