The rate of inflation can be higher than what you accrue in interest. Not suited for long-term goals: If you’re looking to save for long-term goals, like retirement, other investments, like stocks, are usually a better choice for your money. Plus, you won’t be able to easily view account details for both accounts in one place. Harder to access than traditional savings accounts: If you have a savings account that's with a different bank than your checking account, you may have to wait a few days for funds to transfer from one to the other. Safety: Many high-yield accounts are FDIC or NCUA insured, meaning that if something were to happen to the bank your account is with, your money will still be safe.Īccessibility: While there are limitations to the number of free withdrawals you can make from a savings account, your money is still readily accessible whenever needed. Plus, interest in these accounts is compounded daily. Higher APYs: Since high-yield savings accounts have higher APYs than traditional savings accounts, you’ll accrue more interest over time. You can use our tool, in partnership with Bankrate, to compare savings rates today. Since the rate of return on high-yield savings accounts is better than that of traditional savings accounts, you'll be able to accrue more cash over time. Over time, rates will decrease as inflation cools. Higher interest rates could potentially increase savings rates further, so many recommend locking in rates now while they're on the rise. Experts believe that the Fed may raise rates again at the next meeting. The Fed opted to raise rates at the last meeting, raising the federal funds rate, a key bank lending rate, to a target range of 5.25%-5.50%. Savings rates have been on the rise following a series of interest rate hikes by the Federal Reserve, as the central bank has sought to reduce inflation. The APY for high-yield savings accounts can be anywhere from 3% to over 5% - much higher than that of a traditional account. An APY, or annual percentage yield, is the amount of interest earned on an account in one year. A high-yield savings account is essentially the same as a traditional savings account with one key difference - high-yield savings accounts pay a higher than average APY on deposits.
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