I’m sure that many of you have thought “WTF” when you saw the pathetic interest you earned from keeping your savings at your brick and mortar bank…this has been my thought for quite some time.
Well, a couple of weeks ago I posted an article talking about a high yield savings account and it was around the same time I made the switch to having one for my own.
I’m not here to tell you which bank I used to have my savings in nor where I moved my money to. What I do hope to do is motivate you to make the same change for yourself.
Well, like many of you have experienced or are currently experiencing, the brick and mortar banks think their savings account are generous by giving a 0.00036804% APY….
There was literally no incentive for keeping our emergency fund there, so I told my wife “we are taking our business elsewhere!” And, we did. We did some research and found great online banks (meaning they have no brick and mortar store fronts) and we agreed to move forward with our pick. When we signed up, they were originally offering a 1.05% APY and literally a week later they increased their interest rate to 1.15%. I couldn’t help but think this was a match made in heaven!
After our first month’s statement came through, I began to calculate the difference and it turns out that we are earning 2,818% more than the previous bank offered me!
So, if you’re convinced and are going to move your savings and emergency fund to a high yield savings account, here is what you need to consider…
The accessibility will be more difficult than a traditional brick and mortar bank. You won’t be able to go to an ATM and withdraw the funds. If you need the funds, give yourself 24-48 hours before the funds are transferred via ACH to your checkings account. However, this isn’t necessarily a bad thing because the funds you’re moving over is your emergency fund and savings. You shouldn’t be withdrawing from that money…right?
Scope the market because there are many banks in this space competing for your business and they all have different interest rates. Pick the right one for you!
Once you’ve selected a few banks to vet, check their minimum deposit requirements. Some banks offer a higher APY if your deposits exceed $10,000. So make sure you read those requirements carefully.
Always check out their terms and conditions! You don’t want to pick a high yield account with caveats and terms that don’t fit what you’re looking for.