A savings account is a great place to save your money in case you need access to fast money for an emergency. It is also a safe space to save your money while saving for a financial goal or if you are ready to invest. But not all savings accounts are worth your hard -earned money.
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Most traditional account banks have a very low annual percentage yield (APY), which means that you do not deserve much interest. According to the Federal Deposit Insurance Corporation, the average APY for savings accounts from 17 March was 0.41%, which is not much.
However, a High-Yield savings account offers a much higher APY with which you can build up more interest and grow your money faster.
“High-yield savings accounts can help you earn a bit about your money where the interest rates are today,” says Eric Mangold, founder and asset manager of Argosy Wealth Management. “If you have parked cash in a savings account, you must assess which APY you earn. If it is low and see where the rates are today, you may be able to earn 3-4% or even more on your money in a high-interest savings account.”
Not having your money on a high-yield savings account can be a valuable mistake, here is how.
It has already been established that a traditional savings account does not offer customers a high APY, but a high-yield savings account can be on average 3-5%on average. According to US News & World Report, the highest account for March 2025 is 24/7 cloudbank, with an interest of 4.57%.
With that in mind, if you would open an account with $ 24,450, you would only earn $ 100.25 in interest in one year from a traditional savings account with an APR of 0.41%. However, if you place $ 24,450 in a high -interest savings account with an APY of 4.5%, you earn $ 1,100.25 in a year. That’s why you would miss $ 1,000 in interest.
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A High-Yield savings account gives you more interest, but there can be a disadvantage:
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Limits for recordings. Although it is easy to switch off money, there can be a limited number of times a month or year. Continuing can increase reimbursements.
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Investing in the S&P 500 has had a greater annual return of 12.39% over the past decade, according to US News & World Report, which is more than double the 4-5% APY of a high-interest savings account.
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APY rates can fluctuate quickly, depending on the market.
