It’s no secret that people who have a lot of money are good savers. It’s also common sense that these financially savvy people aren’t hiding cash under their couch.
So, where and how are these wealthy people saving their money? And, where’s the best place to store your emergency fund?
If you’re asking these questions, you’ve come to the right place. This post is going to talk about why high-yield savings accounts (HYSAs) have become the preferred way for both young and old people to save money.
What is a HYSA?
A high-yield savings account is a savings account where you earn money on your deposits just for keeping funds in the account.
The term high-yield comes from the fact that these accounts generally offer higher returns (which are called annual percentage yields, or APYs) than major banks. At the time of this writing, many HYSAs are paying around 1% back on your deposits.
One percent might not sound like a lot, but it’s much higher than APY you can get from major national banks like Bank of America, Chase, or Wells Fargo. For example, the average interest rate on major savings account is only around .1%. So if you put your money into a high-yield savings account, you’re earning over 10 times the national average.
How do HYSAs work?
HYSAs are just like a traditional bank account. However, they’re designed for saving money and not making everyday transactions. They’re not a replacement for your checking account. In fact, most HYSAs have limits on the amount of deposits and withdrawals you can make (usually up to six withdrawals per month). The federal government sets these limits, not the banks.
How much can I earn from a HYSA?
As an example, if your HYSA offers 1% APY, and you have $1000 in the account, you’ll earn about $10 each year, just for having your money sit there. The more you add to your account, the more you’ll earn.
If you have $10,000 in your account, you’ll earn $100 each year, for doing nothing. If you have $100,000 in your account, you’ll $1000, and so forth.
What are the best HYSAs?
The best part about HYSAs that they are very easy to sign up for, and it usually doesn’t require a credit check or anything else. You just need a little bit of money to deposit to get started.
Here are some of the most popular HYSA’s right now.
1. Ally Bank
2. Discover
3. CIT Bank
4. HSBC Direct
5. Barclays
The time is now to boost your savings
In these uncertain financial times, it really helps to have some money saved to pay for unintended expenses or cover your bills in the event of a job loss.
Once you start adding to your high-yield savings account, you’ll never look back.
Happy saving!
