Whereas saving and investing money is important in building wealth, some people could be selling themselves short. Crypto, stocks, and bonds can all offer very high returns but are risky, and traditional savings accounts offer interest back but the rates are minuscule compared with those offered by other financial products. This has prompted many to start looking for the best high-yield savings accounts.
With these high-yield accounts becoming more popular, traditional savings accounts could soon become obsolete. What's the difference between the accounts, and should you get a high-yield savings account?
Are high-yield savings accounts worth it?
High-yield accounts offer much higher interest than traditional savings accounts, of up to 20–25 times more. In 2021, CNBC found that high-yield accounts' average interest rate was nearly one percent, while regular savings accounts averaged just 0.04 percent.
Some high-yield accounts charge more transaction fees than traditional ones, but many offer minimal to no fees. One thing to keep in mind, however, is that interest rates can fluctuate, so even if a bank is offering a high rate now, it could decrease significantly.
What are the best high-yield savings accounts?
Comenity Direct High-Yield Savings Account
Comenity Direct's high-yield accounts currently offer an APY (annual percentage yield) of 0.75 percent, one of the highest rates out there. A minimum deposit of $100 is required to start an account, but there's no minimum balance required after the deposit is made. There are no monthly fees and users deposit checks through the mobile app.
LendingClub Bank High-Yield Savings Account
LendingClub offers high rates as well, with a current rate of 0.65 percent. However, account holders don’t earn the highest rate possible unless they have a minimum balance of $2,500. There's also a $100 minimum initial deposit required, but no minimum balance requirement after that. Users aren't charged monthly fees and even have access to an ATM card if requested.
Marcus by Goldman Sachs High-Yield Online Savings
Marcus by Goldman Sachs, one of the most convenient high-yield savings accounts, allows holders to withdraw saved money or wire transfer savings to another bank for free. It currently offers a 0.50 percent APY as long as users have at least $1 in their account. There's no minimum deposit requirement, but it's best to keep a few dollars in there to maximize your returns.