When it comes to personal finance, having the right information can make a world of difference. One area that often surprises people is the realm of high-yield savings accounts (HYSAs). A recent survey by The Motley Fool Ascent revealed that many individuals are unaware that they can earn more than 4% interest on their savings with an HYSA. This passive income opportunity simply involves keeping cash in the bank.
1. “Opening a high-yield savings account takes too much effort.”
The idea of opening a new bank account can seem daunting and time-consuming. However, don’t let this misconception deter you from potentially earning higher interest rates with an HYSA. The best options are often provided by online-only banks, eliminating the need to physically visit a bank branch. Most of the account setup process can be completed online, requiring only a few minutes of your time to enter personal details.
To fund your new online HYSA, linking an external checking account for transfers is a common and convenient method. With services like Zelle, transfers can be completed swiftly. Additionally, withdrawing funds is straightforward; you can either use the linked checking account or open a checking account alongside your HYSA for easy access to cash through ATMs or debit cards.
2. “Banks that offer high-yield savings accounts aren’t trustworthy.”
In the financial world, concerns about trustworthiness are valid given the history of predatory practices. However, one key safeguard for bank customers is FDIC insurance. Established after the Great Depression, the Federal Deposit Insurance Corporation (FDIC) provides insurance coverage up to $250,000 per depositor, per bank and ownership category. This protection ensures that your money is safe even if the bank fails.
Before opening an HYSA with an online-only bank, verify that it is an FDIC member institution using the FDIC’s BankFind Suite tool. This extra step can offer peace of mind knowing that your funds are protected. High-yield savings accounts are a safe way to earn higher interest rates while benefiting from the security of FDIC insurance.
Don’t let misconceptions about effort or trustworthiness prevent you from exploring the benefits of high-yield savings accounts. With the right information and understanding of the safeguards in place, you can make informed decisions to maximize your savings potential.
