EVERYTHING THERE IS TO KNOW ABOUT HIGH YIELD SAVINGS ACCOUNTS
September 12, 2019
If you have been following your favorite personal finance bloggers and gurus you have probably heard all the talk and benefits of a High Yield Online Savings accounts and maybe you have been wondering- what is it? and how do you get one? Don't worry, I got you.
Let's Talk About Online Banking And High Yield Savings Accounts. Everything There Is To Know.
What is a High Yield Savings Account?
A high yield savings accounts are savings accounts that earn you higher interest rates compared to your normal traditional savings account. Meaning, you will get more interest (money the bank pays you for keeping your money with them) in a high yield account than in your normal savings bank.Where Can I Open A High Yield Savings Account?
High Yield Savings accounts are offered by an online bank. Banks like Barclays, Ally, Marcus by Goldman Sachs, American Express, HSBC to name a few are some of the most known and talked about online banks.What is An Online Bank? & Why?
Online banks are banks that do not have actual branches like your normal bank, and everything is "online". Because these banks are not brick and wall banks they are able to offer more to their clients; since they have fewer expenses. Because of this, online banks are able to pay you more when it comes to interests which are one of the best things they have to offer.What is an APY?
APY stands for Annual Percentage Yield a.k.a interest rates paid to you.
What Are The Pros & Cons of Online Banking?
There are many pros and benefits of online banking and high yield accounts, but since everything is online- there are a few cons to it.CONS
- No actual banks
- Cannot deposit cash
- No physical/teller experience
- Fewer or no ATM access
- Not all High Yield Accounts offer a checking account, aka no debit card
- Transferring out of the account can take 3-5 business days to process
The cons above could be a deal-break for some people, but honestly, for me, they are not. Because of the day and age we live in, actual experience with a teller or depositing cash is really not a must-have for me. We live in a world of technology and honestly, most of us don't actually go into our banks-like at all.
A lot of online banks also offer a checking account- if this is the case then this bank will have an ATM network access. Now, if the bank only offers a savings account and CDs, then there will be no ATM access and you will need to have at least one checking account with a traditional bank to be able to transfer money.
Here are all of the good reasons why you should start thinking about a High Yield Savings account.
PROS
- Higher Interest Rates (10 to 20x higher than your traditional savings)
- No Monthly Fees
- No Account Opening Minimum Balance (most of these accounts required no minimum to no balance)
- Easy Account Opening Process
- Multiple Savings Accounts is possible
- Easy and friendly online banking system- since everything is online, their websites & apps are really user-friendly
Now, like any traditional bank- online banks all have their own pros and cons before you open any account the main thing I will recommend for you to do is to do your own research. But, to get you started here are the main online banks I recommend based on my research and what they offer.
Please refer to their website for the most current and accurate APY numbers.
Please refer to their website for the most current and accurate APY numbers.
Pros
-No Monthly Fees
-No Minimum Balance Require
-Links Easily with Current Bank Accounts
-24/7 Account Access
-FDIC Insured (up to $250,000 per account).
Cons
-No Mobile App
-No ATM Cards or Checks
-No Checking Account
Pros
-No Monthly Maintenance Fees
-No Minimum Balance To Open
-Tools To Help You Save
-Easy Online Transfer To & From other Banks
-Easy to Use App
-Can Open Multiple Accounts At Once
-Easy Online Application
-Can Open As Many Accounts As You Want
-FDIC Insured
Cons
-No Checking Account
-No ATM networks
-Takes 1-2 Business Days To Verify Linked Accounts
-Takes 2-3 Business Days to Fund/Transfer Money into the Account
-Takes 1-2 Business Days To Verify Linked Accounts
-Takes 2-3 Business Days to Fund/Transfer Money into the Account
-Money Is On Hold After Transfer For 5 Business Days
-8AM-8PM Customer Service
I have several accounts with Barclays, out of all the banks I will be mentioning in this post, this was the Bank that made the most sense to me and my needs as well as my lifestyle. I spent days doing my research on all of these accounts, weighing the pros and cons and it all came down to this one based on my needs. Because I actually have an account with Barclays I'm able to know how long it actually takes to complete the whole account opening process and transferring money into the account.
Pros
-Goldman Sachs is a Well Known Bank (this is very important for many people)
-No Minimum Amount To Open
-No Monthly Fees
-No Transfer Fees
-No Overdraft Fees
-FDIC Insured
Cons
-No Checking Account
-No ATM Networks
-No Mobile App, online only
-Customer Service 8AM-10PM M-F & 9AM-7PM S&S
Pros
-No Monthly Maintenance Fee
-$1 Minimum Balance For Account Opening
-24/7 Online & Mobile Assistance
-Tools To Save
-FDIC Insured
Cons
-Limited On ATM Network
-Mobile App is Not Easy To Use
-Checking Account Offred Has A Fee
Pros
-No Monthly Fees
-No Online Transfer Fees
-Mobile App
-FDIC Insured
Cons
-$100 Minimum To Open The Account
-$100 Minimum Single Deposit Per Month To Earn The Highest Interest Rate
Pros
-No Minimum Balance To Open Or Daily
-No Monthly Fees
-No Withdrawal Fee
-Offers A Checking Account
-1% Cash Back Rewards Checking Account
-Large ATM Network
-No Monthly Balance Required on Checking Accounts
-Customer Service 24/7
Pros
-No Monthly Fees
-Free Checking Acc with 0.65% APY
-ATM Network Access
-$1 Minimum To Open Account
-No Monthly Minimum
-FDIC Insured
Cons
-$15 Charge For Outgoing Wires
-10 Days Hold On First Deposit
-No External Transfers On The Application
-Limited To Only 3 Linked Accounts To Transfer Money To
-$33 Fee On Return And Overdraft
Ally Online Savings
Cons
-No Maintenance Fee
-No Minimum Balance Required
-24/7 Customer Support
-ATM Reimbursement
-FDIC Insured
-Uses The Zelle Service
-Can Open Multiple Accounts
-Checking Account With No Fees
-Earn Cash Back With Checking Account
-ATM Access
-No Account Opening Minimum Required
-Digital Banking Tools
-Has Mobile App
Cons
-Lowest APY right now- As of 9/12/2019
SoFi
Pros
-Offers A Checking Account
-No Fees
-No Account Opening Minimum
-Free ATM Network With No Fees
-Can Have Joint Accounts
-Has A Mobile App
-Gives You $50 When You Refer A Friend
-FDIC Insured Up To $1.5 Mill
Cons
-New Bank With Not Many Years In The Business
Bank Of America- 0.03% APY
TD Bank- 0.03% APY
Santander- 0.03% APY
Wells Fargo- 0.01%
Citibank- 0.08% APY
Chase- 0.01% APY
Capital One 360- 1.00% APY- offers the highest APY for a normal savings
PNC Bank- 0.01% APY
Citizens Bank- 0.01% APY
High Yield Accounts are great because you are able to get more for your money, now before you open an account make sure you do your research and go with the bank that works best for you. Not all online banks offer a mobile app which was a deal-breaker for me- if I'm using an online bank I need to be able to see my money from anywhere and not just from my computer.
Fees are also a dealbreaker for me as well as a high account opening minimum and daily minimum, these are things to consider before opening ANY type of accounts especially when you are starting out.
-Free Checking Acc with 0.65% APY
-ATM Network Access
-$1 Minimum To Open Account
-No Monthly Minimum
-FDIC Insured
Cons
-$15 Charge For Outgoing Wires
-10 Days Hold On First Deposit
-No External Transfers On The Application
-Limited To Only 3 Linked Accounts To Transfer Money To
-$33 Fee On Return And Overdraft
Ally Online Savings
Cons
-No Maintenance Fee
-No Minimum Balance Required
-24/7 Customer Support
-ATM Reimbursement
-FDIC Insured
-Uses The Zelle Service
-Can Open Multiple Accounts
-Checking Account With No Fees
-Earn Cash Back With Checking Account
-ATM Access
-No Account Opening Minimum Required
-Digital Banking Tools
-Has Mobile App
Cons
-Lowest APY right now- As of 9/12/2019
SoFi
Pros
-Offers A Checking Account
-No Fees
-No Account Opening Minimum
-Free ATM Network With No Fees
-Can Have Joint Accounts
-Has A Mobile App
-Gives You $50 When You Refer A Friend
-FDIC Insured Up To $1.5 Mill
Cons
-New Bank With Not Many Years In The Business
How Do Online Banks Compare To Normal Banks?
One of the main benefits of online banks especially in the savings department is the higher interest they pay you compared to your normal banks. Here are some of the most known traditional banks and how much they pay you for keeping your money with them.Bank Of America- 0.03% APY
TD Bank- 0.03% APY
Santander- 0.03% APY
Wells Fargo- 0.01%
Citibank- 0.08% APY
Chase- 0.01% APY
Capital One 360- 1.00% APY- offers the highest APY for a normal savings
PNC Bank- 0.01% APY
Citizens Bank- 0.01% APY
High Yield Accounts are great because you are able to get more for your money, now before you open an account make sure you do your research and go with the bank that works best for you. Not all online banks offer a mobile app which was a deal-breaker for me- if I'm using an online bank I need to be able to see my money from anywhere and not just from my computer.
Fees are also a dealbreaker for me as well as a high account opening minimum and daily minimum, these are things to consider before opening ANY type of accounts especially when you are starting out.
Other Things To Know ...
The good thing about High Yield Accounts is the extra money they put in your account, the downside to this is that you are required by law to pay taxes on any interest you earn. Anything over the amount of $10 dollars. Meaning, if in a year your account pays you $300 in interest you will be required to report this in your taxes and pay for this. Now, that is just one downside to making more money, so do not let that stop you from opening a high yield account and making your savings earn you some extra money.
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