Set Up Your High Yield Savings Account (HYSA)
A High-Yield Savings Account (HYSA) is exactly what it sounds like - a savings account that offers a higher-than-average interest rate. But what sets it apart from the checking account I mentioned in the past article?
A HYSA offers you the chance to put your money into a still liquid account that allows for withdrawal, while earning enough interest to usually keep up and outpace inflation. It is an account where your money can grow passively and safely. No investment required.
So how do you choose a HYSA?
Competitive APY:
The APY or the rate should be around 3-4% annually but can vary based on the economy
No Monthly Maintenance Fees:
Look for no monthly maintenance charges
Should be Insured:
Just like Checking Accounts (previous article) it should be insured by the FDIC (banks) or NCUA (credit unions)
Easy Online Access and Transfers:
Look for external bank linking meaning you can link your HYSA account to your checking account and can transfer money in and out of the HYSA easily
Low or No Minimum Balance Requirements:
Ensure the minimum deposit (minimum amount of money required to sit in the account) is low or zero so you can start small and grow consistently
Transfer Restrictions:
Some banks limit the number of withdrawals per month, make sure you familiarise yourself with the regulations ¹
References:
¹ Karl, S. (n.d.). What is a high-yield savings account?. Investopedia. https://www.investopedia.com/articles/pf/09/high-yield-savings-account.asp
