Knowing where you stash your cash is as important as habitually practicing the concept of saving.
Instead of opening a standard savings account where the returns are not promising, a high yield account proves more rewarding.
To begin with, your interest entitlement is well over the national average of traditional savings accounts. The increasing competition among saving rates is why accounts like Synchrony high-yield savings came into being.
Although the interest rate you potentially earn is a decisive factor, the formalities involved in account opening and maintenance also play critical roles. Where there is no obligation to paying maintenance fees or maintaining a minimum balance, you stand to gain.
Determining Factors
If you are contemplating heading the high yield savings account route, it pays to compare all your available options. Especially when you intend to maintain a relatively large savings balance, making a comparative study on the listed parameters is advisable:
Assured Interest Rate
Before stashing your money, confirm the interest rate you can expect from the banking institution. Also, is it a flexible or promotional rate only applicable for an initial timeframe? A fixed interest rate assures you of consistently high returns.
Initial Deposit Amount and Minimum Balance Requirements
Examine the prerequisites to initiate the opening of your high-yielding account. What is the minimum you are expected to deposit at the outset and are you comfortable with the initial amount specified?
Another relevant factor is the minimum balance you need to maintain (if at all) to earn the assured interest. When there is a minimum balance outlined to maintain the said account, you should keep that threshold.
Falling below the mark will invite a fee or not entitle you to the interest rate you were hoping to earn. Also, find out if the bank levies a fee for exceeding the monthly withdrawal limit.
Access to Money
With regards to withdrawing your funds, you should have easy access to your money. Unlike a regular account, using an ATM card for withdrawal purposes does not necessarily apply to high-yield accounts. Instead, provisions like mobile cheque deposits and electronic transfers take care of having access to your money when you need it.
Online Application Process
Opening a high-yielding account involves an online application process. It is thankfully not a lengthy or complicated procedure. Preferably keep the following personal details at hand as most institutes demand the same:
Full name
Residential address
Contact numbers
E-mail address
Social security number considering your interest earnings is taxable income
Scanned image of your driver’s license, passport, or valid photo identity
Should you wish to open this account jointly with another individual, the above inputs are needed for the second applicant. The online application also includes a series of questions on your background.
Providing inputs on your employers, previous addresses, and debts helps process and subsequently approve your application. This online procedure is faster and more convenient as it saves you the effort of making a special trip to the bank.
At the outset, assign a beneficiary who stands to inherit the balance reflecting in your account if something untoward happens to you and your joint holder. Requesting for text alerts and e-statements facilitates accurate corroboration of your income and expense.
Registering for internet banking facilities allows for seamless and uninterrupted transactions.
Debunking Myths
Are you one of those sitting on the fence and delaying opening your high-yield savings account? Besides such accounts offering ease of opening and convenient online transactions, their round-the-clock customer service is another valuable addition.
Setting the record straight to help strengthen your faith in the workings of this savings option:
Secure Strategy
Opting for an FDIC-insured bank to create such an account will guarantee maximum safety. Even with Synchrony high yield savings, the FDIC insurance applies to deposits worth USD 2,50,000 per account holder. Moreover, electronic transactions via online banking rule out any risk associated with human error.
Large Balances Not Warranted
You can start saving with a low opening balance and make provisions for small automatic deposits. In this manner, your balance increases, and so does the interest you earn on it.
No Monthly Fees
Because you can expect a higher interest rate does not imply you pay a monthly fee. Recurring monthly deposits made by you negates the need for the banking institution to levy a charge.
Notable Benefits worth Highlighting
The factors listed above will compel you to consider opening a high-yield savings account. It is also worth looking beyond the obvious benefits. Highlighting some here for your deeper understanding:
With the higher interest you earn, you can meet your savings goals faster.
Typically, internet-only banks support such accounts; hence, ensure you create a separate account to cater to long-term savings.
Provisions to transfer funds electronically between your regular savings and high-yield accounts enhance its functionality.
Even when your standard and high-yield accounts are with different institutions, you can deposit cheques into the latter account using the online banking application.
Ideal Candidate for a High-Yield Savings Account
Go with this option when you are keen to save money for a larger purchase or build an emergency fund. Should you not need immediate access to your savings and are comfortable transacting online, proceed with opening such an account.
Your checking account offers all conventional bank services while your high yield savings focus on generating higher interest for you. Having multiple accounts with different banking institutions does not complicate matters. Online banking ensures you can smoothly conduct all sorts of transactions across banks.
Choosing this route yields high returns on your principal savings as it also covers you under federal insurance. To maximize your earnings, do extensive research before proceeding and give preference to an institute that imposes fewer restrictions.
Above all, prioritize your needs and long-term savings goals by identifying a banking institute that supports your larger financial plans.
Reach out to an experienced financial advisor who provides comprehensive guidance on relevant matters. Ask all the questions you may have to make the most of your savings through the best investments.
Read more:
What Should You Know Before Opening High-Yield Savings Accounts?
