High yield savings accounts are a nice way to make a wee bit of extra income without added risk.
This gives you the best of both worlds: Since there’s deposit insurance, you have an element of safety yet you are earning income.
The bank earns this income through overnight investments in bond-like instruments and passes on some of the proceeds to you in the form of annual percentage yield.
High Yield Savings Accounts Without Minimum Balances or Hidden Fees
The money you put in a high yield savings account doesn’t get tied up the way higher paying instruments do, so you can withdraw funds when you need to spend the money.
You can get your money out of a high yield rate savings account faster than you might from a certificate of deposit, which pays an average of one percentage point higher to offset strict limitations on when you can withdraw money.
The more cash you have to deposit, the greater the selection you might face, but you don’t want to go barrelling into this category without reading the fine print.
Look Carefully at the Terms
Some banks have minimum balance requirements in the tens of thousands, while others may offer different tiers of interest rates corresponding to different balance thresholds. Some of the banks that don’t require minimum balances have hidden fees that eat into any yield you would otherwise earn.
Fortunately, there are high yield savings accounts without minimum balances or hidden fees — but if you have less than $1 in the account the interest rate might involve denominations including fractions of a penny, so the banks qualify as much in their disclosures. Several such offers are listed below.
Barclays
1.5% annual percentage yield
Marcus by Goldman Sachs
1.5% annual percentage yield
Synchrony Bank
1.5% annual percentage yield
American Express Bank
1.45% annual percentage yield
Discover Bank
1.4% annual percentage yield
Finally, a good thing to consider when you’re shopping for a bank account is whether the account has a sweep feature. A sweep feature automatically transfers an amount that exceeds, or falls short of a certain level into a higher interest-earning account at the close of the business day. Sweep features can be useful for optimizing your savings especially if you are holding a large amount of cash.
Readers, what kind of bank accounts do you have? Are you earning any interest on your balances?
Jackie Cohen is an award winning financial journalist turned turned financial advisor obsessed with climate change risk, data and business. Jackie holds a B.A. Degree from Macalester College and an M.A. in English from Claremont Graduate University.