Everyone has financial goals to pursue. Whether it be just to build emergency funds, aiming for a down payment, or saving for a major purchase. All these calls for maintaining a savings account. You might consider choosing a high-interest savings account. You earn more and reach your financial goals sooner!
Saving accounts with high yields work much similar to traditional savings accounts. You put in your hard-earned cash and let it grow by earning interest over a period of time. But the brighter side of a high-interest savings account is that you reap bigger benefits, most especially if you use your savings for the long haul.
Firstly, you definitely earn more with a much higher interest rate. This could mean a lot in your annual and long-term earnings. With higher yields for your savings, you reach your financial goals easier and faster. You could build more cash to be prepared for emergencies such as hospitalization, and other unwanted events that may happen.
The high-interest earnings are computed based on an “annual percentage yield” or APY. As a rule, the higher the account’s APY, the faster the funds grow. So, maximize your hard-earned money today and maintain a high-interest savings account.
Secondly, high-yielding savings accounts can cushion you against inflation. A high inflation rate decreases your buying power. With your money in a savings account with high-interest rates, it can reduce your losses or negate the effects of inflation. This is a great way to protect your money for the long term.
If the interest rate on your saving account is higher than the inflation rate, then you are a winner. You have made more money than you have lost. If the inflation rate is higher than the interest rate on your savings account, your buying power would still decrease but your earnings on your savings account could lessen the impact.
And also, you are assured your savings fund is protected. Most banks, as major financial institutions, are insured. This translates that your money is protected with these institutions. Your savings fund is guaranteed, up to stipulated amounts, even in the event, the bank would stop its operations.
Lastly, looking at the darker side, there are drawbacks to think about. Some banks may require a minimum maintaining balance and others may charge a monthly service fee. Also, Federal law limits the frequency of monthly withdrawals up to six times only.
Moreover, just like traditional savings accounts, the interest rate may vary and fluctuate as dictated by economic forces. Despite this fact, you are still at the advantage. You will definitely earn more. Your money set aside will give you the most value on a high-interest savings account.
Final Thoughts. Maintaining a high-interest savings account is the best option to budget your savings. Setting aside a part of your earnings into your savings fund regularly is ideal. And choosing to maintain your excess funds in a high-interest savings account is a great idea as part of your journey in managing your personal finance!