Looking to make more money from savings account interest? High-yield savings accounts generally offer greater rates of return than typical savings accounts, helping to grow money faster with minimal effort.
This article looks at the potential pros and cons of high-yield savings accounts and what to consider before opening one.
High-yield savings accounts (HYSA) work similarly to regular savings accounts but generally offer higher interest on money deposited.
Banks compound interest over time, typically monthly, quarterly, or in the case of many high-yield accounts, daily. Providers of high-yield savings accounts will list the annual percentage yield (APY), which is based on the interest rate with compound interest factored in over a calendar year. In theory, the more frequent the compound period, the greater the return over time.
To give a good high-yield savings account definition, it's necessary to point out that APYs can be variable and tend to fluctuate. Terms and conditions for high-yield accounts, including fees and minimum requirements, also differ between providers. PayPal Savings1, for example, doesn’t have fees or require a minimum balance.
Some high-yield savings account benefits may include:
Some cons of high-yield savings accounts can include:
Here's a checklist of factors to weigh when comparing different high-yield savings accounts:
High-yield savings accounts may be used for a variety of goals, including:
Ultimately, high-yield savings accounts offer the potential to grow money with often minimal effort. They can help savers get on a path to achieve specific savings goals and grow their money over time. Be sure to research different providers, consider the different types of accounts available, and evaluate potential fees to choose the best option that aligns with one’s personal financial goals.
Learn about PayPal Savings.1
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