Is Opening A High-Interest Savings Account Right For You?

Depending on your current spending needs, it may be time to move your money to a high-interest savings account that yields a better return, especially if you’re a small business owner.

If you need immediate access to your money instead of locking it up for years in a certificate of deposit, a bank money market savings account often is the best option.

If you want to maximize the return on your savings, then a high-interest savings account or high-yield savings account can be an even more appealing option.

Understanding High-Interest Savings Accounts

High-interest savings accounts have much in common with regular savings accounts.

Both are eligible for deposit insurance protection at FDIC-insured banks. The standard insured amount is $250,000 per depositor, per insured bank, for each account.

Most banks offer savings account holders perks like debit card and ATM access.

You will face a choice between an online bank or a local bank for your deposit accounts. A local bank provides personalized customer service with direct, face-to-face assistance. This is appreciated and valued by many bank customers.

Whatever type of bank you choose, online or local, you should be comfortable with their technology. If you’re not comfortable with their online tools and mobile banking features, research other banks and find what suits you best.

Questions To Ask Yourself

There are some things you should consider before opening a high-interest savings account. Here are a few you really need to think about:

1. What is the APY? The annual percentage yield (APY) tells you how much you’ll earn with compound interest over the course of one year. The APY allows you to compare apples to apples when it comes to rates.

2. Do you have enough money to meet minimum balance requirements and avoid extra fees? Some accounts have minimum monthly balance requirements, and monthly maintenance or other associated fees can quickly add up. Check the minimum balance and fee structure at each bank you are considering.

3. Are there other perks your bank will offer if you have a high-interest savings account? For instance, see if opening the account gives you access to a bonus banking package or other products at a favorable cost to you.

4. Do you need access to your money soon? Using a CD still isn’t a bad avenue to choose because they may pay a higher rate than savings accounts. If you can afford to lock up your money for a long period of time, you might be able to earn even more interest.

Ultimately, the right type of account can boost your bottom line. A high-interest account can ensure you earn the most on money you need in the short term and earn the perks your bank provides to its best customers.