Do you have a savings account, but you don’t want to invest it in the stock market? There’s another way you can make your money work for you, called a high-yield savings account.
A high-yield savings account is a bank account that earns you a higher interest rate than a standard account. This higher savings rate means a better return on your money thanks to compound interest. Savings rates at traditional banks are usually very low, averaging 0.06%, while higher-savings accounts are generally closer to 1% or even 2%.
If you put $100 into a savings account with a rate of 0.06% interest, you would get $100.06 after a year, while an account with an APY of 1.7% would earn you $101.71. While it might not seem like much, it’s money you don’t have to lift a finger to earn. These accounts are generally insured up to $250,000 at banks by the FDIC and at credit unions by the NCUA, making them a safe place to store cash.
So where exactly should you put your hard-earned money? Below are just a few options available.
A subsidiary of Goldman Sachs, Marcus, offers an interest rate of 1.7%, with a $0 minimum balance and the ability to make up to six withdrawals per month. There are also no transaction fees, making it one of the most accessible and affordable options. They offer a rather attractive CD, with a 2.25% APY for a five-year CD and 1.65% APY for a 13-month APY. If you don’t withdraw your money within 10-days after it matures, however, your CD will renew, and you won’t be able to access your money for a while.
The other downside is that they do not have ATM or checking account options available. You will need an account at another bank to transfer funds into your savings, but you can set up a direct deposit for each month.
2. Credit Karma
The personal finance and credit checking site just recently launched a high-savings account with an APY of 1.8%. Like Marcus, there are no transaction fees or minimum balance, and it is insured up to $5 million by the FDIC.
The difference is that Credit Karma promises to give you the highest interest rate possible through its network of 800 partner banks. It optimizes its customers’ funds by moving accounts to the network bank with the highest interest rate. However, some banks require a minimum balance to earn an APY, so it’s unclear if that would apply or not if you have an account with Credit Karma.
3. CIBC U.S.
CIBC U.S. offers one of the highest rates out there, with a 1.85% APY. It’s the U.S. arm of Toronto-based Canadian Imperial Bank of Commerce and offers many banking services, including a checking account with no overdraft fees, and ATM reimbursements. You need at least $1,000 to open up a savings account with CIBC, but as long as you have at least one penny in your account, it will earn interest.
The bank has very few branches in the U.S. and limited mobile banking. It’s best for clients wanting a checking account connected with their savings.
Citizens Access is another savings account with an APY of 1.85%, but only with an opening deposit of $5,000. You will need to maintain the minimum balance to earn the high-interest rate. Anything below $5,000 will earn just 0.25% APY. It also offers competitive CDs with its one-year CD having an APY of 2%. But there is no checking account or mobile app, and the bank has no branches.
The London-based bank has an online-only option for U.S. clients with an APY of 1.7%. It offers only a savings account and a CD. With no in-person branches, your accounts can be managed via their Android and iOS app.
It has no minimum deposit and no monthly fees and is one of the most competitive options when it comes to high-yield savings accounts. However, no branches or U.S. presence means its customer service can be a bit lagging at times, and it offers no checking account option.