Intro to HYSA: Why Sooner is Better for High-Yield Savings Accounts

Intro to HYSA: Why Sooner is Better for High-Yield Savings Accounts

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5 Benefits of a High-Yield Savings Account

1. Accessibility High-Yield Savings Accounts are accessible—meaning that almost anyone at any financial level can open one. Some HYSAs don't require minimum deposits or automatic transfers either. One thing you will want to take into consideration is if the HYSA has any monthly maintenance fees. This is especially important when 

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5 Benefits of a High-Yield Savings Account

opening a savings account with a lower amount of money. We'll get more into this later, but make sure any maintenance fees aren't going to undermine the money you could save in the first place—or cause you to incur overdraft fees. Additionally, they are fast and easy to open with the option to open using online banks. No in-person visits to 

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5 Benefits of a High-Yield Savings Account

brick-and-mortar banks are required. Also, you can open your HYSA in a different account so it's separate from your other funds—like the checking account attached to your debit card. It's fun to watch your HYSA grow in that account, too!

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5 Benefits of a High-Yield Savings Account

2. Year Over Year Growth As we mentioned before, HYSAs are great because your money will earn interest just sitting in the account.  This means you'll see year over year growth thanks to compounding interest without you having to lift a finger. This also means the sooner you open it, the better.

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5 Benefits of a High-Yield Savings Account

3. Limited Withdrawals You can also see this as a negative, but if you are dedicated to actually saving the money, this is a good thing.  Use your HYSA to store your emergency fund or long-term savings.

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5 Benefits of a High-Yield Savings Account

4. No Expert Knowledge is Necessary Entry-level knowledge is A-OK! We tested this theory out and opened a high-interest savings account with an online bank in just a few minutes.

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5 Benefits of a High-Yield Savings Account

5. Set It and Forget It: Direct Deposit Once you set it up, let it go and grow your money by setting up direct deposits.  Every time your paycheck hits your account, schedule a portion of that to go directly to your HYSA. You'll forget you ever had the money to begin with while it compounds.

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How to Open a High-Yield Savings Account

Step 1: Identify the account and bank that meets your needs. Step 2: Follow the online steps for opening an account on the bank's website or go visit one of their branches in person. Step 3: The online application process will take about 15- 20 minutes to complete and you will need to be at least 18 years of age and a US citizen to

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How to Open a High-Yield Savings Account

apply at most banks. Be prepared with your physical U.S. address and social security number ready to input. Step 4: Decide if you want paper or online statements. Step 5: Make your first transaction by moving money into your new account.

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What to Watch Out For When Opening an HYSA

Minimum Balance Requirements As we mentioned earlier, some banks will require you to keep a minimum balance and if you fall below that you could pay fees.  Do your research and set yourself up for success by keeping your balance above the minimum threshold—or by setting up overdraft protection 

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What to Watch Out For When Opening an HYSA

 in case a charge takes your balance lower than needed.

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What to Watch Out For When Opening an HYSA

Interest Rates + Annual Percentage Yield Sometimes, interest rates for high-yield savings accounts will be higher than regular savings accounts.  However, other times the difference is less significant. The best HYSA accounts are typically those with higher interest rates and low or no fees.

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What to Watch Out For When Opening an HYSA

This matters because the annual percentage yield (APY) is the real rate of return earned on an investment, taking into account the effect of compounding interest.  So the higher the interest you're able to make on your money, the more it will compound and the higher your APY will be. This is a good thing because the account balance gets a 

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What to Watch Out For When Opening an HYSA

little bigger, so the interest paid on the balance gets bigger as well.

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What to Watch Out For When Opening an HYSA

Maintenance Fees Yes, it's true that some banks will charge you a small "maintenance fee" while you keep your money with them and earn the interest rate they have set.  Do your homework before you put your money with an account that has these fees and make sure you're comfortable with that.

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How Much You Can Save With Your HYSA?

Let's see an example of putting your money into an HYSA and seeing what can happen. Let's pretend you put an initial deposit of $5,000 into an HYSA that offers 0.50% APY. And each month you set up a direct deposit of $100. Here's what your initial $5,000 deposit could grow into: Year 3 National Rate: $12 Year 3: Interest Earned: $102

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How Much You Can Save With Your HYSA?

Year 4 National Rate: $18 Year 4: Interest Earned: $148  Future Balance: $9,848 Interest Earned: $148Year 1 National Rate: $3 Year 1: Interest Earned: $28  Year 2 National Rate: $7 Year 2: Interest Earned: $62

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