High Yield Savings Account

If you are a regular to any blog dealing with personal finance you will surely run into the great use of high yield savings account instead of your regular savings account at your brick and mortar bank. The term high yield savings account are just like a regular savings account but with some perks to it. These types of accounts usually offer a higher APY (Annual Percentage Yield) which are their most attractive aspect of using one.

The most popular place to obtain one of these accounts has become through internet banking. Online Banks such as HSBC Direct and ING Direct have become very popular due to their higher yield, great customer service, and ease of set up.

If you prefer using a traditional brick and mortar bank rather than an online bank, most national banks offer a high yield savings account. Check with your current bank and ask if they have any higher rate accounts. More than likely they should offer this type account. The most common criteria to open the account would be:

  • A suffeciently large initial deposit
  • Keep a certain balance over time
  • Limit transactions in and out of the account
  • Maintain other banking relationships

For years, I had a savings account with Washington Mutual earning a whoping .25%. When I found out about higher yield savings account, I decided to do some research on them. Washington Mutual did offer an account with a great rate. I believe it was aroung 5.50% at the time (As of May 15 it is 3.30%). The problem was that they did have to many restrictions to open and maintain one of these accounts. As mentioned earlier in the criteria section of this post, they asked for a large initial deposit, you had to keep a certain balance at all times or suffer penalties and fees, and other things that steered me away from opening an account with them.

I decided instead to go with an online bank and chose HSBC Direct. The setup progress is very easy. It takes you about 20 minutes to apply and if you need any help, they have great customer service that can answer any questions you have via phone or email. The initial deposit is $1 and there is no minimum amount you need to keep. There is no monthly maintenance fees and you are not required to have a checking account with HSBC. In all, I have been more than happy with their services. So much that I have multiple accounts setup with them for differenct uses.

With so many options and the ease of opening a high yield savings, there shouldn’t be a reason why one should continue using a crummy traditional savings account. While you are not earning a tremendous amount of money from the interest earned from the account it sure beats what you where earning before. I’m earning more than $200 a year which is much better than the $10-12 I was earning before.

If you are interested in opening a high yield savings account, do some research and find customer reviews for them. I recommend going over to Bankrate to compare rates and their different options. Lets stop letting our money go to waste and lets start watching our money grow.


1 comment so far

  1. kilcher on

    I use HSBC and like it. It’s really easy to move money to and from my credit union so I can move it wherever I’m getting the higher rate. The only thing I don’t like is that it sometimes takes a day or two for transactions to show up and it takes 5 business days to move money to my credit union.

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