Four Reasons to Stick with Your High-Yield Savings Account Even if Rates aren’t as High as Before - Financial Advisor Heroes (2024)

By Ami Ciccone October 20, 2020

When the Federal Reserve dropped interest rates to near zero this year, many people were disappointed to see that their high-yield savings accounts’ rates weren’t exempted.

While the decision was made in an effort to offset the effects of the worsening economy, you’re probably disappointed to have your saving strategy upended by significantly lower returns. Don’t take out your savings from your account just yet though.

Here are four reasons to keep your money in a high-yield savings account despite rates being lower than before.

Quick Access

The great thing about keeping your money in a high-yield savings account is that you still get to have quick access to it. You can set it up in a way to connect with your checking account and withdraw part of or all of your money should you want to.

Depending on which bank you opened your account in, you can also transfer funds easily and almost instantly across other accounts you’ve linked to your savings account.

Safe and Insured

Of course, it’s a given that your cash is safer in a bank than being kept in your house. You can rest assured that your money stays intact whatever happens to you or your home.

There’s also the fact that the government gives you the added security of insuring bank accounts up to $250,000 per depositor per bank. If you have a joint account, the total insured amount goes up to $500,000.

Still Worth the Interest

While rates aren’t not as good as they were last year, keeping your money in a high-yield savings account would still earn you interest. What’s more, rates would still be better than other saving vehicles without the added risk.

You’ll notice that the high-yield savings accounts across banks are paying rates between 0.5% to 0.8%, which are still up to 80 times more than you’ll get when you open a savings account at a traditional bank.

Full Automation

Another great thing about high-yield savings accounts is that many of them offer you the perk of automating your savings. Most exclusively online banks would allow you to make automatic transfers and create ‘sub-savings accounts’ within a single account.

This makes it easier for you to reach your saving goals, especially if you’re building funds for multiple objectives like buying a home, paying for a wedding, or other big ticket purchases.