High-Yield Savings Account

High-yield savings accounts are a type of federally-insured deposit account which aims to earn interest rates much higher than the national average.

High-Yield Savings Account Highlights:

- Typically, the best high-yield savings accounts offer 15-25x more than the national average interest rate on regular savings accounts - Most commonly offered by online-only banks like CIT Bank, Axos Bank, Comenity Direct, etc., because of their lower cost structure than brick-and-mortar banks

Are There Trade-Offs to Holding Accounts at Different Institutions?

Undoubtedly, holding accounts at multiple institutions can add a wrinkle of complication to managing your finances.  However, if you choose to hold accounts at separate institutions, know that electronic fund transfers (EFT), administered by the Automated Clearing House (ACH), make this setup easy to handle.

High-Yield Savings Account vs. CDs and Money Market Accounts

High-yield savings accounts often require an upfront minimum deposit and a minimum monthly account balance.  You can contribute to them over time, whereas CDs do not offer this ability. Money market accounts offer competitive yields and can allow free debit card access and the ability to write a limited number of checks per month.

How Much Do I Need to Open a High-Yield Savings Account?

The amount of money needed to open a high-yield savings account will vary by institution.  Often, many institutions will only offer their best, advertised rate if you exceed some minimum account balance upon opening. 

How is Savings Account Interest Taxed?

High-yield savings accounts earn interest periodically, such as monthly, quarterly or annually.  Like other interest-bearing accounts, this interest will appear on your account statements as earned interest and will need to be reported on your annual tax return. 

Swipe up TO KNOW MORE ABOUT High-Yield Savings Account