A savings account is a useful place to store money for short-term goals and unexpected expenses. However, traditional savings accounts often offer low returns on your balance.
A competitive savings account interest rate can significantly outperform the national average, providing an opportunity to maximize your savings. Here's what you should know:
What constitutes a good interest rate for a savings account?
As of March 2024, the average interest rate on U.S. savings accounts stands at 0.46%, marking a decade-high. However, numerous high-yield savings accounts boast rates exceeding 4% or even 5%.
It's important to note that savings account interest rates are variable, meaning they can fluctuate over time, making sustained high yields uncertain.
Tips for securing the best interest rate on your savings:
Research high-yield options: Explore different banks and credit unions to find the best rates. Online banks tend to offer higher yields compared to traditional institutions.
Consider Annual Percentage Yields (APY): APY reflects the interest earned over a year, factoring in compound interest. Higher APY means more potential earnings.
Review minimum balance requirements: Some accounts may necessitate a minimum deposit or ongoing balance. Falling below these requirements could lead to lower APY or fees.
Accessing funds: Online banks may not offer in-person services, but they typically provide easy fund access through transfers and ATMs. However, consider withdrawal limits and transfer times.
Evaluate additional services: While some banks focus solely on savings accounts, others offer a range of financial products. Assess if consolidating accounts or exploring other services aligns with your needs.
By diligently researching and comparing options, you can secure a savings account with a competitive interest rate, optimizing your savings potential.
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