Everything You Need to Know About a High-Yield Savings Account
You may have heard the term "High-Yield Savings Account" thrown around a bit in personal finance circles (do I sound like a broken record yet?) and thought, "What's the big deal? A savings account is a savings account, right?" Yes and no. A High-Yield Savings Account is basically a turbocharged version of a regular savings account. While your typical savings account at a traditional bank (think Chase, Wells Fargo, Bank of America, etc.) might offer an Annual Percentage Yield (APY) of 0.05% or less, a high-yield savings account could offer an APY upwards of 4%. Over time, that difference can add up to quite a bit thanks to the magic of compound interest.
Why Choose a High-Yield Savings Account?
The beauty of a high-yield savings account is its simplicity. You're essentially getting paid more to keep your money in the bank. It's a safe, low-risk way to grow your money without requiring the time or know-how needed for investing in the stock market. It’s the definition of making money in your sleep!
How to Open a High-Yield Savings Account:
Ready to take the plunge? Here’s a step-by-step guide using SoFi as an example.
Step 1: Research
Start by doing your homework. Make sure you read the fine print for things like minimum balances, fees, and withdrawal limitations. SoFi, for instance, offers a competitive APY (4.5%) and has no fees for the account, which makes it an attractive choice. However, to get the 4.5% APY, you need to set up a direct deposit with at least $1000/month.
Step 2: Visit the Website
Navigate to the SoFi website and look for the "Products" tab where you'll find the option for High-Yield Savings accounts.
Step 3: Application
Click on "Learn more" under “SoFi checking and savings” and it will take you to a page where you can open an account. You'll usually need to provide basic personal information like your name, address, Social Security number, and employment details.
Step 4: Deposit Money
Once your account is approved, you'll need to fund it. You can typically do this by linking an external bank account and transferring money. Some banks may also allow you to mail a check or make a wire transfer.
Step 5: Confirm and Monitor
After the transfer is complete, check your new SoFi account to confirm the balance reflects the transferred amount. From here on out, it's a good habit to keep an eye on your account, not just to watch your money grow, but also to ensure there are no unauthorized transactions.
Step 6: Automate
One of the best things you can do to maximize your savings is to set up automatic transfers. This way, you're consistently adding to your account, capitalizing on that higher APY.
And that’s it! Opening a HYSA is no different than opening an account at any other bank. It’s just a simple yet effective way to make your money work harder for you. And setting one up, especially with user-friendly platforms like SoFi, is a piece of cake. So why settle for less when your money could be doing more?
*I am a SoFi ambassador and will receive money when you use my referral link to set up and fund your account.
