High-yield savings account – what are they?

September 13, 2007

This article is created by wtdirect an online saving account which explains everything about saving accounts.

Savings accounts are a great place to park your cash. This is because they are deposit accounts that pay interest. Your money typically earns interest from the day it’s deposited until the day it is withdrawn. Savings accounts are FDIC insured, meaning your money is backed by the government up to $100,000 per depositor. Passbook and statement savings accounts have been around for decades. Historically, these types of savings accounts have paid low interest rates. However, savings accounts have evolved over the years. Today, savers have a better choice with the introduction of the high yield savings account.

A high yield savings account offers a more competitive interest rate than a traditional savings account. According to bankrate.com, the average statement savings account offers an interest rate of just 0.35 percent. A high yield savings account can offer an interest rate over 5 percent. For example, WTDirect’s high yield savings account offers an interest rate of 5.26 percent. This type of account is the best option for a high return and low risk for your liquid savings.

Liquid savings is an important part of any investor’s portfolio. This term refers to the cash that every saver should have on hand that can be accessed quickly. In case of a financial emergency, you want access to your money. An emergency fund should contain at least enough to cover three to six months of expenses. Many people also use savings account for money earmarked for a future purchase, such as a down payment on a home. A high yield savings account is a great solution for all these savings needs. It provides a competitive interest rate which allows your money to work for you when you don’t need it. A high yield savings account should also allow funds withdrawal without a penalty.

Where to find a high yield savings account? High yield savings accounts are offered by both traditional banks and those that operate online only. Thanks to the Internet, savers don’t need to rely on local banks to find high yield savings. Make sure to do your homework. You want to select a high yield savings account that will allow you to save with confidence. Here are some questions to ask before signing up:

* High yield savings accounts have variable rates, which means the interest rate can change at any time. Be sure to ask if it’s an introductory interest rate. If it is, ask what the rate will adjust to at the end of the introductory period.

* Does the account require a certain balance in order to qualify for the highest interest rate? Do you need to have any other accounts with the bank to get the highest savings rate?

* Are there any fees, minimum balances or other service charges on the account?

* Is the account FDIC insured? You can verify this at www.fdic.gov

* Are there limits to how many transactions you can make per month?

How to find the best savings rates? There are several resources to consult. Visit bankrate.com which lists the top interest rates by state or nationally. You can also visit online financial blogs for recommendations. Another resource is your local newspaper which typically lists local interest rates in the business or finance section.

Of course, you need to consider more than just rate. This is particularly true if you select an online bank. You should consider customer service, fees, limitations on the account and web site functionality, too. There is a lot of competition among online banks for your business. This means that many online banks have waived minimum deposits; fees; and other rules around savings accounts. All good news for the serious saver!

About WTDirect:


WTDirect offers a smarter way for serious savers to manage larger deposits online with superior, personalized service. WTDirect’s online high yield savings account features a consistently high interest rate, personalized service with a “human touch” and greater protection when it comes to online saving that enables clients to save with confidence.

Posted in Banking & Saving Accounts