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Summary of the Best High-Yield Online Savings Account
Sometimes hiding away your money in your favorite bank is not enough to make you rich. Inflation can significantly deteriorate your money’s worth over the years. The best way millionaires prevent inflation from hurting them is by putting their money to work to build their value over time.
Another excellent way is placing your money in a high-yield savings account that provides you a higher interest rate than normal bank accounts. You will learn everything you need to know about high-yield savings account and how you can protect your money there.
What is a High-Yield Savings Account?
High-yield savings accounts are usually bank accounts that offer a higher interest rate for the cash you deposit. People usually store their emergency funds in these accounts to ensure it keeps up with the current year’s inflation rates. These interests are usually significantly lower than the cash you reap from the stock market. However, a high-yield savings account is the best way to store your cash and increase it while finding the perfect investment for your cash.
Are High-Yield Savings Accounts Safe?
High-yield savings accounts are like normal bank accounts but with a higher interest rate. However, safety generally falls on the company’s ability to protect your cash. Ensure you place your money in a credible bank or brokerage to prevent any losses and hidden charges in your bank account.
Best High-Yield Savings Accounts
Investnix is one of the most popular company’s that offer the best high-yield savings accounts in 2021. The company returns a yield of at least .07% to their customers, which is significantly higher than a general bank account. The FDIC also insures all these accounts to provide insurance for the customer if the company goes bankrupt.
Many other banks offering high-yield savings accounts are Live Oak Bank, Vio Bank, Alliant Credit Union, and CIBC Bank USA.
How to Choose a High-Yield Savings Account
Is it Safe?
The best factor in choosing a bank is to find the bank’s credibility in protecting your money. Most credible and certified banks have insurance from the FDIC to protect their users in case of bankruptcy. Find a bank that takes extra precautions in making sure your money is safely protected without any risk or fraudulent acts.
After finding the safest banks to choose from, select the one that offers the largest yields throughout using it. These interest rates can range from .55%- .70% depending on the bank. Regardless, these rates are not sufficient in creating a significant change in your bank account. Ensure that you put your money to use by investing in the stock market and increasing your investment portfolio.
Best Uses for a High-Yield Savings Account
Most people use high-yield savings accounts to place their emergency funds. People usually build these funds to accommodate at least six months of their monthly income. Other people use this account to store their investment funds before investing in the stock market or other investment opportunities. A high-yield savings account provides you with little growth that can accumulate over time with the correct investment strategies.
Frequently Asked Questions About High-Yield Savings Accounts
Q: Can You Lose Money in a High-Yield Savings Account?
Generally, you should not experience any losses if you place your money in a trustworthy and credible bank. However, fraudulent companies that the FDIC does not insure can mean that you could shoulder significant loss if the company falls.
Generally, market inflation can severely hit your savings account. Inflation can devalue your money to make it slightly insignificant in the coming years.
What is a Money Market Account?
A money market account is another account that offers a significantly higher interest rate compared to other regular passbook accounts. These accounts are also protected by the FDIC up to $250,000. Generally, you should receive all the features you need from a bank account like withdrawal and check writing privileges. However, most accounts require a significant minimum investment, which might not be appealing to beginning investors.
High-Yield Savings Account Terminology
Inflation refers to the increase in prices throughout the years. Generally, a increase in price can significantly devalue the money in a bank account.
Diversification refers to allocating your financial resources to different financial instruments. Some users with a net worth larger than $250,000 will usually place their money in different banks to protect it in case of bankruptcy.
Other Savvy Uses for a High-Yield Savings Account
These accounts can also serve as a fund that you can restrict from withdrawing. Users usually place a percentage of their money in a high-yield savings account to save up for a different use in the future. Some funds can allow the users to restrict the account to prevent them from withdrawing it until a given time.
Online High-Yield Savings Account
Most banks usually have online platforms for you to view your high-yield savings account. However, refrain from companies that only own an online platform to hold your cash. Established banks usually have their physical store that you can go to register and apply for high-yield savings account formally.
Finding the Best High-Interest Savings Account
Some countries only accommodate banks from the respective country. Try sticking to one of the high-yield savings accounts in one of your country's popular banks to prevent any fraudulent and sketchy acts.
Physical and Online Platforms
Find savings accounts from banks that offer both physical and online platforms for your transactions. These banks usually have their place to take care of any transactions a customer might feel like doing in person than online.