When you’re looking for a savings account, many of us want more than just a safe place to keep our money. A high yield savings account can help you grow your wealth by paying interest on your savings. A carefully-managed savings account, supported by regular deposits, can play a major role in helping you reach your financial goals much sooner than you may have anticipated.
What is a high yield savings account?
The yield on a savings account is the money you make from the interest earned on your savings. If your savings account earns more in interest than it costs in fees and charges, it has a positive yield, and makes money. If a savings account’s fees and charges end up costing more than the interest it earns, it has a negative yield, and loses money.
Savings accounts with high interest rates may not always offer high yields, as they sometimes also have high fees. To maintain a high positive yield on a savings account, it’s important to maintain a minimum savings balance that earns enough interest to counter the costs of any fees, and to continue making deposits so the interest you earn on your growing account balance can also increase over time.
How to find high yield savings accounts
For a savings account to offer a high yield, it needs a relatively high interest rate and relatively low fees.
The base interest rate on a savings account is the minimum amount of interest you’ll earn on the account. The maximum interest rate is the highest possible rate you can earn, though this higher rate may not always apply.
Some savings accounts offer a high introductory interest rate when you first open the account, but this rate will eventually revert to the base interest rate when the introductory period ends, meaning you’ll only earn interest at the maximum rate for a limited time only.
Other savings accounts offer a high bonus interest rate, which you can potentially benefit from indefinitely, provided you continue to fulfil the account’s bonus terms and conditions. These terms could include making a minimum number of deposits per month, depositing a minimum value into the account each month, or minimising the number of withdrawals you make each month. But as long as you’re able to fulfil these conditions, you could potentially benefit from a much higher yield on your savings account.
Other features of high yield savings accounts
A high yield is important for a savings account, but depending on how you plan to use your account, other features could also be important when comparing the available options.
- If you value convenience, compare savings accounts that offer access via ATMs and EFTPOS.
- If you prefer to self-manage your money, compare savings accounts with internet and BPAY facilities.
- If you like being able to have a face to face conversation about your finances, compare savings accounts with branch access.
It’s always important to remember that every high yield savings account is different, and not every option will perfectly suit your unique finances. Be sure to compare a variety of options, and make your final decision based on which options will likely help you to reach your financial goals.