In recent years, financial institutions have increasingly focused on online banking. High-yield savings accounts are relatively new to the banking world. That makes them a more convenient choice for short-term savers than certificates of deposit (CDs), where your money is locked in for a set term. In addition, account holders can easily access the funds in their high-yield savings accounts. So even if the financial institution fails, you're protected. The Federal Deposit Insurance Corporation (FDIC) insures deposit accounts up to $250,000 per depositor per insured bank. In an unlucky, volatile year, you could lose money.īy comparison, savings accounts lack that volatility and risk. While you can earn a better rate of return by investing in the stock market, annual profits from stocks are not guaranteed. For one thing, these accounts are very safe. There are other reasons for choosing a high-yield savings account. The APY is the rate of return you'll receive for your deposited funds over one year, including compound interest. īanks advertise savings accounts by their annual percentage yields (APYs). The interest rates on these accounts can be ten times higher than the national average for a regular savings account. A high-yield savings account - sometimes called a high-interest savings account - is a type of savings account that pays higher-than-average interest rates on deposits.
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