Interest Rates Jumped To More Than 6.78% APY On Some Savings Accounts: Learn All The Details
Have you ever wondered how to increase your savings with low risk? Have you ever feel fear about investing money? We certainly did and that's the reason we started the search for safe alternatives.
How does sound the idea of earning a little bit of interest in your hard-earned money? And.. What if it wasn't just a little bit? What if you could earn a lot? Ok, you certainly won't become rich in 1 month, or 2 months, or, well, 3, 4, 5, 6. 7, 15, 69, 150.. months (you got it). But please tell us just one thing: Is 6.78% APY better or worse rate than what you earn at this moment? Could earning this percentage without any significant risk be just a little helpful in your life?
Some banks just don't want clients earning the money they deserve, you know how some banks behave sometimes.. Fortunately, we did extensive research and contacted high-profile financial advisors to find the options that are paying the best rates in the market at this moment and they are just one click away.
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What Is a Savings Account?
A savings account is an interest-bearing deposit account held at a bank or other financial institution. Though these accounts typically pay a modest interest rate, their safety and reliability make them a great option for parking cash you want available for short-term needs.
Savings accounts have some limitations on how often you can withdraw funds, but generally offer exceptional flexibility that’s ideal for building an emergency fund, saving for a short-term goal like buying a car or going on vacation, or simply sweeping surplus cash you don’t need in your checking account so it can earn more interest elsewhere.
Key Takeaways
- Because savings accounts pay interest but keep your funds easy to access, they’re a good option for parking cash you’ll want in the short-term or to cover an emergency.
- In exchange for the ease and liquidity that savings accounts offer, you’ll earn a lower rate than more restrictive savings instruments and investments might pay.
- The amount you can withdraw from a savings account is generally unlimited.12
- The interest you earn on a savings account is considered taxable income. (1)
How Do Banks Make Money on Savings Accounts?
It's no surprise that banks offer savings accounts to further their own profit-making objectives, rather than simply looking to help consumers. Since one of the primary ways a bank generates revenue is to make loans to consumers and businesses and collect the resulting interest payments, they require a supply of funds in order to make those loans.
Offering checking, savings, money market, and certificate of deposit accounts is one way banks attract the capital they need in order to lend money to other customers. It's also how they can enhance their profit-making ability, as the interest rates banks pay on deposit accounts are lower than the rates they can collect on loans. In fact, as we've pointed out, most checking accounts pay no interest at all. And the national average rate for savings accounts is just 0.05%. So when a bank can extend an auto loan for 6% or a credit card rate of 15% to 25%, they generate revenue on the difference, or spread, between the rate of interest paid and interest earned. (2)
Here are the best options available, rated highest to lowest:
- T-Mobile Money – 1.00% APY savings for anyone (4% on up to $3,000 for T-Mobile customers; our review)
- Zynlo – .80% APY money market on balances up to $250,000 (not available in CA, CT, NY, MA)
- Workers Credit Union – .70% to 1.05% APY savings rate (also special rate of 4.32% on first $1,000) (more details in this post)
- Merchants Bank – .75% APY money market
- Affirm – .65% APY savings
- Connectone – .65% savings ($2,500 minimum to $250,000 maximum)
- CFG Community – .59% APY high-yield money market (minimum $25,000) (3)
There are two options: leave knowing all the financial opportunities that could open this year or invest just a few seconds of your time taking a look at the best options we list for you. Your money, your choice.
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