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Is a high-yield savings account worth it?

If you’re looking for a safe and reliable way to grow your savings, a high-yield savings account may be a great option for you. There’s a lot of talk about these accounts, but if you don’t know much about them, you might ask: Is a high-yield savings account really better than a regular savings?!

Here are five benefits of switching to a high-yield savings account.

1. Higher Interest Rates

One of the most significant advantages of a high-yield savings account is that it typically offers a much higher interest rate compared to a traditional savings account. These rates can be two or three times higher than the national average, which means your money can grow much faster.

For example, if you deposited $10,000 into CIT Bank’s Savings Connect high-yield savings with an interest rate of 4.05% (as of March 2023), you could earn over $400 in interest after one year. In contrast, a traditional savings account with an interest rate of 0.01% would only earn $1 in interest over the same period.

2. Low Risk

High-yield savings accounts are typically FDIC-insured, which means that your money is protected up to $250,000 per depositor, per insured bank. This makes them a low-risk option, as your money is protected even if the bank fails.

3. Easy Access to Your Money

While some high-yield savings accounts have restrictions on the number of withdrawals per month, many offer easy access to your cash whenever you need it. You can transfer funds to your checking account at anytime, quickly and easily online or through a mobile app. And in most cases, it only takes 24 to 48 hours to complete a transfer. 

This makes high-yield savings accounts a great option for emergency funds or short-term savings goals.

4. No Fees or Minimum Balance Requirements

Many high-yield savings accounts have no monthly fees and no minimum balance requirements, making them accessible to everyone regardless of income or savings level.

5. Compound Interest

High-yield savings accounts often offer compound interest, which means you earn interest on your interest over time. 

For example, if you deposited $10,000 into a high-yield savings account with an interest rate of 4.05% – and leave the money in the account for 10 years – you’d earn nearly $5,000 in interest.

Opening a high-yield savings account can be a great way to grow your savings quickly and safely, giving you easy access to your money. It’s a low-risk option that can help you reach your savings goals faster.