High Yield Savings Accounts
A high yield savings account is simply a savings account that may have a high annual percentage yield, or APY for short. A higher APY means the more money is made by keeping the money in the account. Most banks offer high yield savings accounts, but only to valued customers. There are also Internet based high yield savings accounts. These have less requirements for usage, but requires the person to manage everything him- or herself. This article will explain what a high yield savings account is, how the bank and Internet versions differ from each other, and why a person would want to save money in one.
High yield savings accounts have a higher annual percentage yield than normal savings accounts. This means that the longer the money stays in the account, the more money is made. Usually the more money in the account, the more money is made per year as well. So over time, the money starts to build up. Banks usually have some form of requirement to use a high yield savings account. Internet based high yield savings accounts tend to have no requirements other than managing the account by a person's self.
Banks usually only offer high yield savings accounts to people who meet certain requirements. These requirements vary with the bank, but there are four that are normal for most banks. One of these is having to make a large initial deposit into the savings account. Another is having to keep the balance in the account high over time. A couple more requirements are having to maintain other banking relationships and limiting transactions in or out of the account. With all these requirements, it can be tough to set up a high yield savings account at a bank, but it is worth it.
An Internet high yield savings account on the other hand does not have so many requirements. Internet based savings accounts can accept a starting deposit as low as one dollar. The one downside is that a person who makes the deposit and bank account has to do a lot of the work. This includes using the Internet, linking the accounts, and managing all transfers. This alone can make people want to use a bank based high yield savings account.
High yield savings accounts are a useful tool for saving money and making money while saving. The higher APY than normal means that more money is made over time than a normal savings accounts. Banks can offer high yield savings accounts, but they usually impose restrictions on who can use one. An Internet one will have less restrictions, but more work needs to be done with it, along with the security threats online. A person who saves money in a high yield savings account usually will be much richer later on, so a high yield savings account is very useful for saving money for the long run.