By Sabrina Karl
The internet has changed many things in our lives, from how we connect with others to how we shop. You can also count changes to personal banking among the major impacts of living in an online world, with our ability to electronically manage our money now the status quo.
One specific consequence is how easy — and quick — it’s become to move money from one bank or credit union to another, no matter where those institutions exist. As a result, it’s not as important anymore that one’s checking and savings accounts reside at the same institution.
Enter high-yield savings accounts. Though not all of them carry this name, this certain breed of savings account pays rates much higher than what you’ll earn on a standard savings account — sometimes 20 to 25 times more. The minor catch is that it may require opening the savings account at an institution new to you.
Both traditional banks and credit unions as well as internet-only banks offer high-yield savings accounts. What both types will have in common, however, is a highly digital experience. In exchange for much higher rates, high-yield accounts typically offer only online access, and may limit features.
Dozens of high-yield savings accounts around the country are currently paying 1.50% to 2.00% APY, or even higher. Compared to the national average of 0.09% APY, that’s a noticeable boost in interest each month.
The simple key is establishing transfer connections between your primary account and the new account, so that moving money in either direction is easy and fast (often taking one day, and almost never more than three). But if that lag time is too much, one strategy is holding some funds in a savings account at your primary bank (offering instant transfers) with an additional high-yield account elsewhere.