In this article, we discuss why high yield saving account are better than your standard savings accounts and provide five compelling reasons to consider adopting the benefits of a high yield savings account.

Traditional savings accounts might not be the most suitable choice for achieving your financial goals in today’s swiftly changing financial landscape. With the prevalence of high yield savings accounts (HYSA), numerous compelling factors exist to contemplate switching. But before that, check out Beem to get updated interest rates and compare the latest best high-yield savings accounts that align with your savings goals and priorities. In this article, we’ll discuss the drawbacks of standard savings accounts and provide five compelling reasons to consider adopting the benefits of a high yield savings account.

The national savings rate maximum stood at 5.83% as of July 2023, although the typical interest on savings accounts was only 0.42%. On the other hand, online banks like Ally Bank frequently provide high yield savings accounts with rates closer to the federal rate cap than traditional banking institutions.

What are Traditional Savings Accounts?

Traditional savings accounts, commonly provided by brick-and-mortar banks, have been popular for saving money. They provide a secure place to deposit funds. However, their low-interest rates limit the growth potential of your savings over time.

While traditional savings accounts are safe and convenient, their low-interest rates may not support long-term financial goals. High yield savings accounts and other investment options offer the potential for better returns. Consider the trade-offs between risk and liquidity when exploring these alternatives to increase your savings.

5 Reasons Why You Should Ditch Your Traditional Savings Account

Higher Interest Rates

As the name suggests, the primary draw of high yield savings accounts is to ensure you get higher interest rates. Traditional savings accounts often provide paltry interest rates that barely keep up with inflation. In contrast, high yield savings accounts can offer significantly improved interest rates, allowing your money to grow more rapidly.

Compounded Earnings

High yield savings accounts often compound interest daily or monthly, meaning that you earn interest not only on your initial deposit but also on the accumulated interest. This compounding effect can lead to substantial growth over time, a benefit that traditional savings accounts struggle to match.

Low Fees and Minimums

Traditional savings accounts may have minimum balance limitations and hidden fees that might deplete your money. On the other hand, high yield savings accounts frequently have fewer fees and no minimum balance requirements, making them a more affordable choice.

Easy Accessibility

In the age of online banking, high yield savings accounts offer easy accessibility. You can manage your account, transfer funds, and track your progress from the comfort of your home or mobile device. Traditional savings accounts might limit your access to physical branches or require in-person visits to perform basic tasks.

Aligning with Financial Goals

Whether saving for a major purchase, an emergency fund, or long-term goals like retirement, high yield savings accounts provide a better platform for achieving those goals. These accounts’ increased growth potential and flexibility make them more suited to your financial aspirations.

High Yield Savings Account	Traditional Savings Account
Generally offers significantly higher interest rates compared to traditional savings accounts.	Offers lower interest rates compared to high yield savings accounts.
Due to higher interest rates and compounded earnings, offers better growth potential over time.	Offers limited growth potential due to lower interest rates and minimal compounding.
Typically offers online and mobile banking options for easy access and management.	Offers physical branch access, ATMs, and online banking for basic transactions.
Tends to have minimal or no monthly fees and lower minimum balance requirements.	May have fees or maintenance charges, with varying minimum balance requirements.
FDIC-insured up to $250,000 per depositor, per account category.	FDIC-insured up to $250,000 per depositor, per account category.
Suited for individuals seeking better returns on savings while maintaining accessibility.	Suitable for emergency funds, short-term savings, and basic financial literacy.
A lower-risk option for higher returns than traditional accounts, but lower returns than some investment options.	A low-risk option for basic savings goals, but with limited growth potential.

How to Choose the Best High Yield Savings Account

When making the switch to a high yield savings account, consider the following factors:

Interest Rate: Compare rates among different HYSA options to ensure you get the best deal.
Fees: Look for accounts with minimal fees or no monthly maintenance charges.
Accessibility: Ensure the account offers user-friendly online and mobile banking options.
FDIC Insurance: Verify that the account is FDIC-insured to safeguard your deposits.
Customer Service: Research the reputation of the bank or financial institution for quality customer service.

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Best HYSA Options for You

Ally Bank: Ally Bank is known for its competitive interest rates and user-friendly online platform. They offer a straightforward HYSA with no monthly maintenance fees and 24/7 customer support. Ally also provides a suite of other banking services, making it a comprehensive option for your financial needs.

Marcus by Goldman Sachs: Marcus offers a high yield online savings account with competitive rates. They are recognized for their transparent fee structure and no minimum deposit requirement.

Capital One 360: Capital One 360 offers a high yield savings account with competitive interest rates and no monthly fees. They also provide an easy-to-use online interface and mobile app for managing your account.

Discover Bank: Discover Bank offers a HYSA with attractive interest rates and no monthly fees. They also provide a cashback debit card option and access to various financial products. Their online and mobile platforms make managing your savings convenient.

CIT Bank: CIT Bank offers a Savings Builder account that rewards you with higher interest rates when you maintain a minimum balance or make regular monthly deposits. This unique feature encourages consistent savings while enjoying competitive rates.

Conclusion

A wise financial decision might be switching from your standard savings account to a high yield one. High yield savings accounts align with your financial objectives and desires since they provide the possibility of higher interest rates, compounding earnings, cheaper fees, and increased accessibility. Find the finest high yield savings account using the Beem app as you begin this shift by carefully weighing your options.