High Yield Savings Accounts - All You Need To Know

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High Yield Savings Accounts – All You Need To Know

As a new investor or avid saver, the words high yield is bound to make you smile. And it should! If you are interested in growing your wealth, it is imperative that you get serious about saving. There are many investment tools to choose from. The key is knowing which instrument is best for you.

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The only way to figure out what is best is to know what each investment offers and what your financial circumstances allow. Do not worry, everyone can save once they find the right savings account for them. Here we will be discussing the highly celebrated high yield savings account.

This type of account offers real scope for growth since it couples amazing interesting rates with great facilities. High yield savings accounts present a real opportunity. Let’s explore what they have to offer.

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High Yield Savings Accounts – All You Need To Know

What Is A High Yield Savings Account?

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As the name suggests, a high yield savings account pays about 20 – 25 times than what the national average offers. It will offer a better interest rate than any other savings account that your bank offers. You may have also heard it referred to as high-interest rate savings accounts.

What are the advantages of a high yield savings account?

If you are not already sold by the high interest rates, there are more benefits to look forward to with a high yield savings account.

Access to your funds
With high yield savings accounts, arrangements are made to give your access to your funds if you really need it. Most accounts allow you to withdraw 6 times for the month without incurring a penalty. So these accounts offer some flexibility in case of an emergency.

Safe investment
High-yield savings accounts are insured. So, you can rest easy at night, knowing that your investment is secure.

Ability to make unlimited deposits
You can make as many deposits to your high yield savings account as you want.

Consistent saving
These accounts allow you to set automatic transfers from any other account that you may have. Your money can keep growing with little effort from you.

What are the disadvantages of a high yield savings account?

While a high yield savings account is the golden child of savings accounts, there are some drawbacks that are worth mentioning.

Delayed transactions–
It often takes a few days for your money to move from a checking account, or an account that you have in another bank or brokerage to transfer to your high yield savings account.

Temporary introductory/promotional rates–
Promotional rates are always enticing. After these rates have run their course. You may not be as satisfied with the standard rate.

What is the annual percentage yield (AYP)?

You may have heard this term mentioned in relation to a high yield savings account. It is important that you know what it means. Annual percentage yield can be defined as the rate of return that will be earned in a year when the interest is compounded. So basically this is how your interest would be applied to your account.

What should I look for when choosing a high yield savings account?

If you are shopping around for a high yield savings account, you should be aware of what you should ask about when you meet with your representative at your financial institution.

Interest Rate

Your first inquiry will most likely be about the interest. Here are some questions you can ask:

What is the interest rate?

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How much interest can I expect that rate to pay? (Your representative will probably do a break down for you.)

Is the current rate promotional or standard?

If the rate is promotional, is there a minimum or maximum balance for earning at that rate?

Fees

Are there any fees attached to this high yield savings account? ( High yield savings accounts often have maintenance fees)

What are the potential penalties on this type of account and how can I avoid them? (For example, if you keep your account balance safely above the minimum you can avoid additional charges)

Initial Deposit Requirement

What is the required amount to open the high yield savings account?

With my current financial commitments, am I comfortable with the deposit?
You should assess your financial position and determine whether you spare the lump sum.

Minimum Balance Requirement

How much money am I required to keep in the account to avoid penalties?
You should assess your financial situation to make sure you can keep the account at the balance that is required to avoid unwanted fees. If you fall below the threshold you may not be able to benefit from the interest rate previously agreed upon.

Withdrawal options

Can I withdraw funds from my high yield savings account?

Does this account come with an ATM card facility?

Deposit Options

What are my options for deposits? (High yield savings accounts often allow you to make arrangements for deposits by cheques, via ATM deposits. Some banks even allow you to transfer funds via a smartphone app.)

Compounding Method

How will the interest be compounded against my high yield savings account? (Your interest will either be compounded annually, bi-annually, quarterly, monthly, or daily.

Links to Brokerage Accounts and/or Banks

Can I link my high yield savings account to my account at another bank or brokerage? (This kind of convenience can make your ability to maintain your minimum balance easier. The easier it is for you to move your money around, the more likely you are to succeed as saving.)

If you are interested in opening a high yield savings account, you have come to the right place. We offer the best high-interest savings account. You can always expect competitive rates from Prosperity Pardner. They have amazing interest rates at 5% per quarter and 20% per year. You can visit them at the link below and start the process to see whether you qualify!