by Sara S
Do any of you have experience with a high interest or high-yield savings account (HYSA)? This wasn’t even on my radar until a few months ago. I had never heard of them, and I didn’t know just how much more interest you could earn with them than a normal savings account.
We’ve had a big lump of money in our savings from our tax return plus our emergency funds. We don’t want to touch it just in case we have to unexpectedly shut down our business again due to COVID. So we need the money available and accessible, but I hate to just have it sitting in our normal savings account. After all, our regular savings account just has a teeny tiny 0.05% APY (Annual Percentage Yield).
Why Choose a High-Yield Savings Account?
So we decided to use a HYSA. They’re online banks that tend to have less overhead, so they have much higher APY than a normal brick-and-mortar bank. I liked the idea of getting a higher APY, but I didn’t love the idea of sending off our precious savings to some website I’d never heard of before.
But here’s what I’ve learned about high-yield savings accounts:
- They’re federally insured (up to $250,000 per depositor by the Federal Deposit Insurance Corporation or the National Credit Union Administration)
- They have zero or very low monthly fees
- Their APYs are consistently higher than other savings accounts
Since the pandemic, most online banks have cut their rates big time in response to the Federal Reserve’s emergency rate cuts. But there’s hope they’ll return to 1.0% or above like usual. In fact, in January of 2020 rates were around 1.75%, and in January of 2019 some were over 2.0%! (See other past rates here.)
Narrowing Down Which HYSA
So now that I felt safe picking a HYSA, I had no idea which one to go with. Our accountant talked about some ideas, and then I looked at lists of the top ones. But what I found is basically no two sources agreed on one perfect account.
So after some research, I decided to go with Ally.com. Someone I trust has liked using them, and I also found Ally has:
- Typically good, competitive APYs. Today it’s 0.60% no matter your balance.
- No monthly maintenance fees
- No minimum deposit
- Up to 6 transfers/withdrawals a month
- A checking account option (which allows faster deposits and withdrawals, and faster access to your money)
I opened the account and we deposited $42,000 (gulp) to it this week. That was a frightening transfer, if I’m being completely honest. But it’s safely there now and we look forward to watching it grow. So far I like their website and it’s been easy to use, and I hear the same about their app.
The idea is that the interest we slowly earn stays in the account until we see what’s up with the pandemic. Then if we don’t need it, I vote it goes toward our student loan debt. My husband would prefer to put it towards retirement. But either way, we’re looking forward to having a bit of extra money to assign somewhere.
What do you think of HYSA? Do you use them?
Read More:
Safeguarding Your Future: A Comprehensive Review Of Augusta Precious Metals
Yes, I’ve had an online savings account with Ally for a couple of years. I have a set amount of money automatically transferred from my main bank checking account into the savings account each month. I’ve found the website easy to navigate, transfers back to checking are easy, and their rates were competitive. In the research I did beforehand, I found that they were highly recommended.
That’s so good to hear! I’m glad you’ve been happy with it.
I have been using Ally for about 5 years now and love them. I have used their high yield CDs too and have been impressed by their competitive rates.
That’s awesome. It looks like they offer a lot of great products.
I have an account with Ally as well. Only minor complaint would be transfers can be slow. I would keep a small cushion in a savings account with your checking account bank for more rapid transfers if you happen to find you need something faster, like a forgotten check or something. I have recently opened one through Citibank as well, which is currently offering 0.70%.
I’ve wondered about the transfers. It took about 3 days for our initial transfer to go through.
Yep, we keep our 6-9 months of living expenses in Ally. It was weird to transfer it, but we went from making $10/ year in interest to about $1600/year.
That’s huge!
I’ve been happy with Ally too (although it’s been sad watching the rates tumble over the last few months).
I am really happy now that they let you have “buckets” for different savings categories without actually opening separate accounts. I have about 6, and my monthly interest goes directly into my “vacation” fund.
I’ll have to look more into the buckets. Sounds helpful.
Another satisfied Ally customer. It has been disappointing to watch the rates drop, but it’s still more rewarding than what you get at other banks.
I’m glad so many of you love Ally! Boosts my confidence in them for sure.
The rate with Ally do drop with the market, but i have also seen that they adjust up about as quickly vs other banks that cut rates quickly but are slow to adjust up. The last time rates were rising a year or two ago, I would get an a email from Ally, often within a week or two after the fed rate increases, stating they were increasing the interest rates. That is another plus for them.