I can’t tell you the number of clients I have seen that have either not heard of a high yield savings account or haven’t given one much though. I get it. You have a savings account and aren’t really in the market for another one.
However, I would like to give you five reasons why you should have one.
Higher Interest Rate
While a high yield savings account is very similar to a traditional savings account, the interest rate is a big differentiating factor. Most savings account offer less than a quarter of a percent! You are literally earning pennies!
Now, at the time of this writing, interest rates are down across the board. However, even a high yield account will still get you about three quarters of a percent. Not even two years ago, that rate was over 2%! In my opinion, interest rates will eventually go back up. Don’t you want to take advantage of more free money? Would you rather be earning 2% (or more!) in your savings account or less than .25%? I’m guessing the first choice. Don’t forget about the power of compound interest!
You Will Hit Your Goals Faster
This goes along with the first reason. With a higher interest rate comes more money. The faster you make money, the faster you will hit your savings goals. If you are wondering how much to save, check out my blog post here.
Easier Access to Your Money
Savings accounts give you easier access to your money than a brokerage account. When you transfer money from your savings account to your checking account, it’s instantaneous. When you transfer money from your brokerage account to your checking account, it can take up to several days. If you ever have an emergency, you have money available at your fingertips. And while you do not need it, it is there growing at a faster rate than if it were sitting in a traditional savings account.
Motivation
There is hardly a better motivation to continue savings than to see your account growing! Your account will grow faster than it would with a traditional savings account. And with your weekly automated transfers there, what could be better than watching your account grow? Keep that money safe, and you will be able to cover unexpected expenses that may come up.
You Can Enlighten Your Friends
Okay. Okay. So this may not be directly a benefit for you, but doesn’t it feel good to help others? If your friends are in the dark about high yield savings accounts, you could very well be the person who makes them just a bit wealthier.
There you have it. Five reasons why you should open a high yield savings account. If you are not familiar with bankrate.com, I encourage you to check out that site! You can search savings accounts and sort from those with the highest interest rate to the lowest. It’s a great place to begin your research.
