When you’re shopping for any product or service, you certainly want to make sure that you get a good deal for your money. This means balancing quality with cost so you come out ahead. But are you one of those individuals who doesn’t apply this to the most important product/service of all? You should make sure that you get what you deserve, the best you can get, when deciding where to put the money itself.
What Is High Yield?
One of the best places to put your funds so that you get a good return is a savings account. But you don’t want to drop your money in just any account. You should select a high-yield savings account to increase your savings. What is meant by “high yield” in this situation? First of all, the interest rate paid should be higher than what you’ll get with a certificate of deposit (CD). Many people have decided to use high-yield accounts offered by an online bank for rates they that can’t get at their local walk-in branch.
One key factor that you should understand from the start: An account of this type is not guaranteed to deliver this rate forever. In fact, this interest rate can fluctuate (higher or lower) based on what’s happening globally, regionally, and locally. However, some of the leading online banks allow you to earn interest in the 4% range, for example, without making you meet a lot of difficult standards to get there.
Adding Up the Interest Earned
With an account of this type, you can earn an absolute minimum of 0.50% on any balance for the entire year. That rate increases to 1.20% annually if you deposit a specific amount each month. You’ll also benefit from online bill-pay and earn additional interest when you do. If you spend a minimum amount on a credit card issued by the same bank each month, you’ll be paid another 1.20%. This means that you can earn 4.10% each year simply by paying your bills and using your credit card.
Online banks generally pay higher interest rates on savings plans simply because they don’t have the expenses of maintaining a building and the offices in it. This allows them to pay a bit more. It’s that simple. This was the major attraction of online banking in the early years and you’ll still find better rates online. When you’re searching for the highest interest rate, you’re most likely going to find it through technology rather than walking into a branch bank.
You’ll probably notice that online banks are more likely to offer new features and benefits. This is true of mobile check deposit, for example. Of course, you also benefit from online bill-pay as mentioned earlier. In addition, you’ll have access to ATM convenience, which may be one of your key requirements.