All of us should have an emergency fund to help create some financial stability, just in case. Sometimes that is easier said than done. Especially with the current savings account rates at the traditional brick and mortar banks. With that being said, though, where should you be putting this money? This is where the best high yield savings account comes into play. There are quite a few on the market today, so choosing the right one for you is important.
What is a High Yield Savings Account?
A high yield savings account is an account that nets you a higher interest rate on your savings than a traditional savings account. With traditional savings accounts running interest rates of .25% – .75% typically, you aren’t getting much return on your money just sitting there.
While the high yield savings account rates used to be much higher before the recession hit, they are still much better than a traditional savings account. Currently, the high yield savings account rates are running an average of 1.90% – 2.40%. This is phenomenally better than those traditional rates!
How it Works
Not every high yield savings account works the same way. But, the majority of them are operated through larger banking institutions but have no physical locations. Which means that most of them are FDIC insured. But you should always confirm, before opening an account, that they are FDIC insured to protect your money.
This also means that the platforms are usually all digital, since there are no physical locations. This is great for the majority of us, but it means that you can’t get your money out right away. There is usually a few days delay in the funds transfer between accounts.
Therefore, if you are somebody who thinks they will need their money right away, then this might not be the best option for you.
However, since this should be your emergency fund, the hope is that you wouldn’t need the money the same day, but would be able to wait the few days. Those few days of waiting are well worth the extra interest you will be making monthly.
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Best High Yield Savings Accounts
Seeing as there are a lot of high yield savings accounts to choose from, we wanted to give you some of the best we have found on the market today.
They are:
- VIO Bank – Current APY 2.42% with $100 minimum balance
- Popular Direct – Current APY 2.40% with $5,000 minimum balance
- TAB Bank – Current APY 2.40% with no minimum balance
- Northpointe Bank – Current APY 2.30% with $25,000 minimum balance
- My Savings Direct – Current APY 2.25% with no minimum balance
- Citi – Current APY 2.25% with no minimum balance
- CIBC USA – Current APY 2.20% with $.01 minimum balance
- Cit Bank – Current APY 2.20% with $25,000 minimum balance
- HSBC Direct – Current APY 2.20% with $1 minimum balance
- Salem Five Direct – Current APY 2.20% with $100 minimum balance
- Live Oak Bank – Current APY 2.15% with no minimum balance
- UFB Direct – Current APY 2.15% with no minimum balance
- Barclay’s – Current APY 2.00% with no minimum balance
- Citizen’s Access – Current APY 2.00% with $5,000 minimum balance
- Goldman Sachs USA – Current APY 2.00% with no minimum balance
- State Farm Bank – Current APY 2.00% with $1,000 minimum balance
- Ally Bank – Current APY 1.90% with no minimum balance
- American Express National Bank – Current APY 1.90% with $1.00 minimum balance
Choosing the Right One
Ultimately, which account you choose needs to be the best fit for you. If you are just starting out building your emergency fund, then you will need to look for one that doesn’t require a minimum balance.
The same thing applies even if you have enough to start out with to cover their minimum balance requirements but you think you might need to pull out a chunk of it at some point. If the account requires a minimum balance then you will have to keep that minimum amount in, no matter what, in order to keep the account open.
A lot of them will also let you open up multiple accounts, which is a good thing for a lot of us. I know that we currently have two high yield savings accounts with My Savings Direct. One is our emergency fund and the other is our travel fund. We plan to open another one for home repairs at some point too. The capability to have multiple savings accounts open with the same interest rate can make dividing up funds appropriately much easier for some of us.
One more important factor, when choosing an account, is to take a look at their opening process. Some of these will require more steps, and time, to get the account initially open. I know, for us, when we opened our accounts with My Savings Direct it only took us approximately 10 minutes to get each one opened. Some of these will take longer and require more information to get started.
Take Away
Overall, you have a lot of choices when it comes to picking the best high yield savings account for you. Ultimately, the things you need to think about and decide for yourself before choosing one are:
- Is it FDIC insured?
- What is the current interest rate?
- Is there a minimum balance requirement?
- How do the money transfers happen?
- How quickly can you transfer money?
- Can you have multiple accounts open at the same time?
- How long does it take to set up the initial account?
Once you have this figured out, then pull the trigger and start boosting your savings!
Which high yield savings accounts have you found to be the best for your needs?
