Opening a high-interest savings account is one of the best ways to grow your savings and store your money safely. Whether you’re saving to purchase your first house or car or setting up that emergency fund, this type of savings account can help you reach your goal.
If you’re interested in opening a high-interest account, it’s essential to understand what it is and how it works. Learning all about high-interest savings accounts can help determine if you should open one. Start your savings journey by learning about the basics today!
What is a High-Interest Savings Account?
Banks and credit unions offer high-interest savings accounts to qualified customers. This savings account provides a much higher interest rate than a traditional savings account you find at banks. Aside from letting your money sit and enjoy the higher rate, it also functions similarly to a regular savings account. You can deposit money into your account, and the bank pays you the interest.
Withdrawing your funds when needed is possible, although the bank may ask you for a charge fee. You can open a high-interest savings account for various purposes, such as:
- Emergency funds
- Car Downpayment
- House Downpayment
- Vacation pocket money
- New furniture
- Wedding
- Education
A high-interest savings account isn’t often a smart choice for retirement savings. But compared to other savings accounts, it can serve more than one purpose to help you with your financial plan. You might want to open up a high interest savings account with Great Southern Bank to enjoy the benefits of banking!
How Does a High-Interest Savings Account Work?
High-interest savings accounts have some things in common with other savings accounts. You can make regular deposits, access your money through bank transfers or withdrawals, store your savings securely, and has transaction limits.
This type of savings account pays significantly more than the traditional one. Plus, high-interest savings are insured by Federal Deposit Insurance Corporation (FDIC). So when your bank fails, your funds are protected to a certain amount.
What are the benefits of a high-interest savings account?
The primary benefit of opening a high-interest savings account is earning higher interest than other savings options. Here are some of the benefits you can enjoy from this type of account:
1. Higher interest rates
With a high-interest savings account, you’ll earn more interest on your savings as time goes by. However, your claim depends on various factors, such as how often your bank compounds interest.
2. Lesser fees
Since high-interest accounts are available through exclusive online banks, you’re safe from the overhead costs of bank branches.
3. FDIC insurance
All high-interest savings accounts are FDIC-insured by up to $250,000 per deposit. So, in any case, if your bank goes out of business and can’t pay your bank, the FDIC will reimburse you.
4. Withdraw funds easily
High-interest accounts let you withdraw funds easily whenever needed. Keeping your funds within reach makes high-interest accounts great for emergency funds and short-term savings.
5. Interest compounds
Most high-interest savings accounts compound daily, meaning you earn interest on your money daily. This leads to making more cash compared to traditional savings compounded monthly.
Take Your Savings Plan to the Next Level!
Determining whether a high-interest savings account is for you depends on the purpose of why you’re saving money. Storing your money in high-interest accounts will let it earn some interest without worrying about the volatile stock market. Today, take your savings plan to the next level with a high-interest savings account!
References:
- https://www.investopedia.com/articles/pf/09/high-yield-savings-account.asp
- https://www.cbsnews.com/news/high-yield-savings-accounts-benefits/
No comments yet