It wasn’t that long ago that your favorite online bank account was paying nearly 4 to 5%! All of that for doing nothing except stashing your money in the bank! While the rates today are not as great as they used to be, don’t forget that a high yield savings account can still be an important part of your personal finance strategy.
You may be working on saving up for the deposit on your very own home, going on an overseas trip, or buying a brand new car. Not only will each of these efforts require a carefully devised budgeting plan and a great deal of willpower, but you can also use the stability of a high yield savings account to help as well. Here are a few reasons why:
The most common reason why many people choose to use a high yield savings account is for the accumulation of interest. The larger your sum of money, the greater the interest earned. Many banks and financial institutions offer promotional interest rates, better interest rates for making regular repayments and rewards for not withdrawing from your savings account. If you’re looking to save a great amount of money, you could see yourself earning hundreds of dollars in interest each year!
Being Rewarded for Making Deposits:
A great perk of opening a high yield savings account is that many institutions offer rewards for making regular deposits. Some banks, for instance, will provide customers with a substantially higher interest rate if they make deposits over a certain amount each month. Rewards, such as these, can encourage customers to make more frequent deposits, in turn developing great savings habits for the future.
Less Withdrawals = Better Interest:
To further encourage customers to save, enabling them to reach their goals, many banks enforce penalties for withdrawing money from your designated savings account. Most financial institutions allow a maximum of one or two withdrawals each month, before your interest rate is lowered, prohibiting you from earning large amounts of interest on your savings balance.
Scheduled Compulsory Deposits:
Sometimes saving money can be very difficult. Those brand new shoes or that great new jacket can be very tempting, often hindering your attempts at saving. Scheduled compulsory deposits are a great solution for those who need a little tough love. Agreeing upon a value with your bank, which will then be deducted from your regular income and deposited into a savings account, is a great way to achieve your goals, within your desired time frame.
A High Yield Savings Account Plus No Debt = Success:
A high yield savings account provides a smart solution for beginning on the road to financial freedom. While saving money is one of the best ways to stay out of debt, eliminating already existing debt can sometimes prove to be difficult. A number of debt consolidation solutions are available to consumers, including mortgage refinancing and debt consolidation loans. Getting your debt under control and combining it with a savings plan is the perfect recipe for financial success!
Readers – What is your favorite high yield savings account? What kind of rate are you getting?
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