All You Need to Know About High-Yield Savings Account

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A high-yield savings account is one of the finest savings options available in today’s time. This type of savings account has a much higher interest rate as compared to regular savings account. As per a report by Investopedia, the interest rates on high-yield savings accounts are usually 20-25% higher than the regular savings account interest rates. Due to such high interest on savings account, you can grow your money quickly.

In India, you can open a high-yield savings account with reputed banks through a hassle-free online application process. However, before opening a high-yield savings account, you must be well-aware with its nuances. Below we have elaborated on the pros and cons of high-yield savings account to help you make a well-informed decision.

Pros of a high-yield savings account

  • The primary benefit of a high-yield savings account is that it helps you earn more interest on the account balance. Since your money grows quickly, you can save more amount in a relatively short span. This can further help you achieve your financial goals sooner.
  • The best high-yield savings accounts come with zero additional costs, no monthly maintenance fees, and low minimum deposits and balance requirements.
  • As high-yield savings accounts are usually offered by online banks, you can easily manage your money on-the-go with mobile banking apps.
  • You can easily transfer money between your high-yield savings account and other bank accounts.
  • High-yield savings account can also help segregate your savings form your expenditures. Because high-yield savings accounts are online, you cannot open one with the same financial institution as your regular savings account. Savings accounts allow unlimited number of transactions per month and are designed to make spending money, transferring funds, and paying bills convenient. Having a high-yield savings account at another bank can separate your long-term saving goals from your daily finances.

Cons of a high-Yield savings account

  • Some high-yield savings account may require you to meet an initial minimum deposit to open an account. This can be challenging if you have just started saving money. Moreover, a few high-yields savings accounts also have maintenance fees and other charges. These charges and fees may offset the benefits of the higher interest rate.
  • Interest rates on high-yield savings accounts can fluctuate at any time. Also, most of the online high-yield savings accounts don’t have a physical bank location. Thus, while some high-yield savings accounts offer ATM cards for easily withdrawals, not all of them do.

To sum it up, high-yield savings accounts can prove to be a great financial product and help you save for your bigger goals such as purchasing a house, buying a car, saving for vacation, etc. Additionally, it can also be a good place to build an emergency fund. If you have any queries while opening a high-yield savings account, you must not hesitate in seeking the help of a bank representative. By doing so, you will be able to avoid any inconvenience at later stages.