Savings accounts are accounts that are typically maintained and operated by financial institutions which pay interest but are not to be used directly as cash like what you use checking accounts for. A portion of a person’s liquid assets are typically set aside and earn interest towards a future monetary return. Typically, high yield savings accounts offer higher interest compared to standard passbook savings accounts.
High yield savings accounts usually offer more perks than what a passbook or standard savings account does. You normally will be paid a higher interest rate or higher APY (Annual Percentage Yield). Just remember that the terminology “higher APY” is the bank’s definition of it and you may or may not agree with it. Still, high yield savings accounts are still worth investigating.
However, they usually do carry higher fees for early withdrawal and higher monthly account maintenance fees than traditional savings accounts, although this is not always the case. Compared to the typical demand account though, this is usually a common practice. In some cases, you have the opportunity to earn a higher interest rate over a considerably shorter period of time.
In order to qualify for opening a high yield savings account you will have to meet the following requirements:
- you will need to make a significantly large opening deposit
- you have to maintain a high account balance
- you need to limit your in and out account transactions
- you’ll have to maintain other relationships with your bank
Typically, a high yield savings account is only offered to specific bank customers. They don’t offer them to everyone. In most instances, high yield savings accounts are only offered to what the bank refers to as valued customers. If you are looking for the best ROI (return on investment), you should always research look at high yield savings accounts instead of standard passbook savings accounts.
Although there are other investment instruments that you can pursue, these carry the least amount of risk compared to other financial vehicles as well as knowing that you can’t lose with this type of investment unless the financial institution fails and you lose all your money. The bottom line is that you need to spend some time researching the different high yield savings accounts that are currently available. Use the internet when you start your search as this will save you considerable time.