CHARLOTTE, N.C., March 13, 2007 - Don’t let your rainy day fund or college tuition savings languish in a traditional savings account any longer. A high-yield savings account is a great way to help your money earn more today.
What is a high-yield savings account?
A high-yield savings account does just that – it pays you a higher Annual Percentage Yield (APY) than a traditional savings account. With traditional savings account interest rates hovering around 0.5%, and high-yield savings accounts between 4%-5%, a savings account with a higher interest rate can be a great way to make your dollars work for you. For instance, $5,000 in a traditional savings account at 0.5% APY will earn you only $2 per month, while a high-yield savings account at 5% will earn you approximately $20 per month, with interest payments going up every month as interest compounds daily.
What is daily compounded interest?
Compound interest means that at the end of each day, 1/365th of the interest rate on your balance is calculated. So, on your $5000 deposit into a high-yield savings account at 5% APY, the bank calculates 1/365th of that 5% interest at $0.68 boosting your balance to $5000.68. The same happens the following day and so on adding on to your increased balance. The good news is – the bank is essentially paying you interest on money they’ve already paid you in interest. Over time, this can really add up. (What’s important to note is compound interest is often times credited to your savings account on a monthly basis.
Are high-yield savings accounts a safe investment?
Like traditional savings accounts, high-yield savings accounts are FDIC insured, unlike brokerage accounts and some money market deposit accounts. With a high-yield savings account you get a high rate of return, without sacrificing security. Also, with a high-yield savings account, you aren’t necessarily restricted to when you can access your funds. You can usually access you account by ATM, a debit card, check or electronic transfer.
How do I get a high yield savings account?
Getting a high-yield savings account is as simple as opening a regular checking or savings account. High-yield savings accounts are offered through the online banking departments of traditional banks as well as Internet-based banks. Visit a bank branch, call, or shop for a high yield account online: the financial institution will have you fill out a short application, and ask for your deposit – either by check or cash, or, if you are not in person, by electronic transfer of funds.
What you need to know.
There are lots of choices out there, so make sure to do your homework. Also, some high-yield savings accounts may require a minimum deposit and permit only a limited number of transactions per month. This type of account is not designed for people who make several weekly withdrawals and some do not offer ATM access.
About LendingTree, LLC
LendingTree, LLC is the nation’s number one online lending exchange, providing a marketplace that connects consumers with multiple lenders that compete for their business. Since inception, LendingTree has facilitated more than 20 million loan requests and $152 billion in closed loan transactions. LendingTree provides access to mortgages and refinance loans, home equity loans/lines of credit, auto loans, personal loans, credit cards and high-yield savings accounts via www.lendingtree.com and 800-555-TREE.
Launched in 1998 with headquarters in Charlotte, North Carolina, LendingTree, LLC is part of IAC Financial Services and Real Estate, an operating company of IAC (NASDAQ: IACI), which also owns or operates LendingTree Loans sm, LendingTree Settlement Services, LLC, GetSmart®, RealEstate.comsm, Domania®, and iNest Realty, Inc.