Why to Open a High-Yield Savings Account
Jul 14, 2024
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A High-Yield Savings Account (HYSA) is one of many wealth development tools. As the name implies, a HYSA
is a type of savings account that offers a higher interest rate than a typical savings account. A higher interest rate, known as an Annual Percentage Yield (APY), allows your money to grow faster over time.
As of June 2024, the average APY on a typical savings account was 0.45% while some HYSAs were offering 5% or more. That means switching your money into a HYSA can grow your money 10 times faster!
Money in Account | Savings Account .45% | High-Yield Savings Account 5.00% | Earning Difference |
$1,000 | $4.50 | $50.00 | +$45.50 |
$5,000 | $22.50 | $250.00 | +$227.50 |
$10,000 | $45.00 | $500.00 | +$455.00 |
Additionally, at the current rate of inflation of 3%, anything less than that is actually causing you to lose money. So, make the switch today! This is low-hanging fruit and one of the easiest and quickest ways to get your money working harder for you.
There’s no catch and nothing sketchy about it. HYSAs are typically offered by online-only banks who do not have to pay for as many brick-and-mortar overhead costs and expenses and can therefore pass on additional savings to their customers.
Some things to look out for when comparing HYSAs:
Monthly fees
Minimum balances
Deposit requirements
Excessive transaction fees
Happy Saving!
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