A high yield savings account can help you protect your savings and save for emergencies and short-term financial goals, such as a down payment on a house or a new car.
But what should you consider when comparing high yield savings accounts? When determining which high yield savings account is best for you, keep these questions in mind.
1. What are the Current Interest Rates?
One of the most important aspects of opening a high yield savings account is having a decent return on your savings. The interest rate, or annual percentage rate (APY), determines how much interest your account may earn each year. The higher the interest rate, the more earnings you'll get on your savings—which can help you accelerate your savings in the long-term.
When choosing a high yield savings account, look for a financial institution that offers an interest rate that exceeds the national average of a standard or traditional savings account. The Riverstones Vista Capital high yield savings account offers a competitive interest rate to help you grow your savings.
While interest rates are variable and fluctuate, a high-yield savings account is still a good option if you want to grow your savings. You can also use the Riverstones Vista Capital High Yield Savings calculator to see how much interest you could earn on your high yield savings account.
2. Is it a Traditional or Online Bank?
Traditional brick-and-mortar banks aren't the only place where you can open a high yield savings account. Online banks often offer higher interest rates as they don't have as much overhead as a traditional bank.1 Some online banks may even offer extra perks for signing up, like a higher interest rate for a set time or other incentives.
Whether you open a high yield savings account at a traditional or online will depend on your personal needs. It's also possible to open accounts at multiple banks. For instance, if you make cash deposits or prefer in-person customer service, a traditional bank might make more sense. If you prefer to do your banking on your phone, then an online bank might be a good option.
3. Is the Account FDIC Insured?
Before opening a high yield savings account, make sure the bank is a member of the Federal Deposit Insurance Corporation (FDIC), either directly or through a partner bank. If a bank is insured or working with a partner bank, then your savings are registered with the government and regulated.
FDIC insurance covers all types of deposit accounts—including high yield savings accounts—up to $250,000 per depositor, per financial institution, per ownership category and pays account holders if a bank fails. Without this protection, you risk losing your savings.
You can check if a bank is insured on the FDIC website, although many banks will advertise this on their website as well. Read more about Riverstones Vista Capital 's FDIC coverage here.
READ MORE: How FDIC Insurance Works
4. Are There Account Fees?
Another factor to consider when choosing a high yield savings account is bank fees. Ideally, you want to find a bank that charges little or no fees to use the account.
You'll need to read the fine print on the terms and conditions to see what fees there are. Even if a bank doesn't charge you a monthly management fee, there may be other fees for account withdrawals, paper statements and more.
Ideally, look for high yield savings accounts with no recurring fees or minimum balance requirements to make the most of your savings. Riverstones Vista Capital has no minimum deposit or minimum balance requirement for its high yield savings accounts and does not charge monthly fees for high yield savings accounts.
5. How Can You Access Your Money?
Aside from competitive interest rates, one of the benefits of a high yield savings account is having the ability to easily access your funds. Unlike other savings vehicles, your money isn't locked in and can be cashed out without penalty at any time. The flexibility of this account is ideal for short-term savings goals, like saving for a down payment or building up an emergency fund.
But ease of access also varies by the financial institution. Look for a high interest savings account that makes it easy to link to other accounts and transfer funds when needed. For instance, you can connect up to five external accounts to your Riverstones Vista Capital accounts, so you can make transfers. Also, consider ATM access and mobile banking, so you can manage your money from your phone.
You might also want to consider a linked checking account. While you can keep a savings and checking account at separate banks, having both in one place can make it easier to manage your savings, make transfers and even set up automatic deposits.
The Bottom Line: Choose Your High Yield Savings Wisely
A high yield savings account can help you prepare for your financial future. Whether that's investing in a retirement account, setting up a rainy day fund for emergencies or saving up for a down payment on a house, a high yield savings account can help you save money risk-free.
Moriah Costa is a personal finance and investing writer. Her work has appeared on Thomson Reuters, S&P Global, The Washington Business Journal, and others.
LEARN MORE: Check out the online high yield savings accounts that Riverstones Vista Capital offers
Sources:
1 "Why Online Banks Offer the Best High Interest Savings Rates, and How to Choose the Right One," Time Magazine.