The easiest way to earn some passive income without doing any work is when you move your savings into a high-yield savings account from your traditional savings account at some big banks.
A high-yield savings account also known as a high-interest savings account gives you a much higher interest rate compared to a traditional bank savings account.
Because these banks are mostly online, they save on overhead expenses and pass that savings to their customers. Most HYSAs are online, but you can find high-yield options in some regular banks too like Barclays, Marcus by Goldman Sachs, Amex, etc. We will go over these in a moment.
Why you shouldn’t save at traditional savings accounts?
Traditional big banks like Bank of America, Chase, Wells Fargo, and Citibank pay AMLOST 0% interest on your savings, which means you lose money by keeping your savings there.
Their annual percentage yield or APY or interest rate is as low as 0.01%. This rate is so low compared to the inflation rate, that you end up losing money instead of gaining any return by keeping your money in a traditional savings account.
How is HYSA better?
So, the best way to have a guaranteed return that can match the inflation rate is to put your money in a high-yield savings account.
When we get a higher interest rate on our savings, our savings grow faster with time. It’s the ultimate set-it-and-forget-it way to make your money work for you, without any risk.
Most of these banks are FDIC insured, which means you will have protection by the US government for deposits up to $250, 000. If you save more than that, you should go with more than one bank as the insurance covers up to 250,000 from each bank failure.
The best part about savings in high-yield accounts is that they are not risky, like stocks or other business-like investments. they are a safe and steady way to watch your money grow.
Since the rate hikes by the Federal Reserve rate, APYs of high-yield savings accounts have been going on the rise, so this is a great time to put your savings in a high-yield savings account. Even though their rates can change a bit, based on the Fed’s decision about overall interest rates in the economy, their rates are still much higher compared to traditional savings accounts.
The options I am going to share have annual percentage yields, or APYs, from 4.3%-5.3%, which is way more than the national average rate of 0.47% at traditional savings accounts and in particular, at large national banks, which give you rates as low as 0.01%
Currently, rates at the best high-yield accounts earn around 5.5% APY. This information is current as of Jan. 28, 2024.
Here’s a list of some of the top FDIC-insured High-Yield Savings Accounts (HYSA) for January 2024. The table includes information on fees, APY (Annual Percentage Yield), and minimum balance requirements. Each of these has a user-friendly app and Easy-to-use online and mobile banking features.
Please note that the specific fees and APY can change, so make sure to check the respective bank’s website for the most accurate and up-to-date information. All this information I compiled is latest as of Jan 28, 2024.
What to look for when picking a High-Yield Savings Account?
- Interest Rate (APY): Aim for the highest APY – it’s the key to growing your savings quickly.
- Fees: Choose an account with no monthly fees or extra charges. We want all that money in your pocket!
- Minimum Balance: Look for accounts with no minimum balance requirement. Whether your savings are big or small, you start earning interest right away.
- Security: Make sure the bank is FDIC-insured to keep your money safe. Check out online reviews for that extra peace of mind.
- Perks: Some HYSAs come with cool perks like welcome bonuses or nifty budgeting tools. Keep an eye out for those extra goodies!
- Accessibility: Easy-to-use online and mobile banking features are a must. We want you to stay in control without any hassle. I have most of my savings in Ally Bank and I will show you exactly how much difference if I were to keep my savings in a big brick-and-mortar bank like Bank of America or Chase. You can go to their website and see how it compares to leading banks when you deposit money there. So if I have $12000 saved there, after one year I will get $522 at 4.35% interest. The good thing about this is that they have savings buckets. Like digital envelopes, where you keep your cash for whatever you want to do). You can use them to track your progress. Ally Bank has become sort of the gold standard of online banks, and for good reason. It has consistently high-interest rates and is easy to use. Ally also offers checking accounts, money market accounts, and CDs.
Which bank am I using?
I have most of my savings in Ally Bank and I will show you exactly how much difference if I were to keep my savings in a big brick-and-mortar bank like Bank of America or Chase. You can go to their website and see how it compares to leading banks when you deposit money there. So if I have $12000 saved there, after one year I will get $522 at 4.35% interest. The good thing about this is that they have savings buckets. Like digital envelopes, where you keep your cash for whatever you want to do). You can use them to track your progress. Ally Bank has become sort of the gold standard of online banks, and for good reason. It has consistently high-interest rates and is easy to use. Ally also offers checking accounts, money market accounts, and CDs.
So I think I gave you enough options and reasons to convince your mind. So don’t wait any further and grow your money securely and easily, so you can get to your savings goals faster than you thought. Whether you are saving for a vacation, a wedding, a down payment for your house, or buying a car, you will not regret this decision.
