As interest rates have gone up in the past year, many are worried about how this may impact them negatively…but most are not aware of how increased interest rates may help them save more money! If you have a Savings account or a Money Market account, you should have noticed an increase in your savings rate this past year. My current savings account rate is 3%, in 2021 it was .4%!
This rate is from a High Yield Savings Account…what’s that, you ask? HYSA are usually at online only banks and they typically pay 20-25 times the national average for savings accounts. These banks are fully FDIC insured and are a perfectly safe place to keep your money. We’ve had our Emergency Fund and Sinking Funds in them for many, many years. You can open a checking account at the same bank and have easy access to the money. The bank that I’m with has no fees, no direct deposit requirements, nothing. We actually do all of our banking with them and have for a couple of years.
So if your savings is earning .1% and is at your local credit union, perhaps consider looking at other banking options for your savings accounts. While 3% may not seem like much, don’t forget you’ll earn interest on your interest over time.
Example: $1000 at .4% interest $1000 at 3% interest
–after 1 year = $3 interest –after 1 year = $30 interest
–after 5 years = $20 interest –after 5 years = $161 interest
–after 20 years = $83 interest –after 20 years = $820 interest
If you’re going to get free money in interest, shouldn’t you be getting the most that you can!
Check out High Yield Savings Accounts and let me know if you have any questions.