5 Reasons I’m Glad I Opened a High-Yield Savings Account
- For years, I left my money parked in a savings account earning just 0.01% APY.
- I decided to switch to a high-yield savings account after learning more about their high rates.
- I chose Ally because of its savings buckets, which help me set aside money for different goals.
- See Insider’s list of the top high-yield savings accounts »
I started my job as a personal finance fellow at Insider in January, and I’ve come a long way. I had always been interested in personal finance, but in many ways I was still a rookie.
In those early weeks, I was less concerned with choosing a high-yield savings account and more interested in figuring out what a high-yield savings account actually was.
I learned that a high-yield savings account is typically offered by online-only banks, and it pays higher rates than savings accounts at traditional brick-and-mortar banks.
Online banks
can afford to pay higher rates because they don’t need to cover expenses that come with physical branch locations.
Once I caught on, I started asking myself why I wasn’t taking advantage of the opportunity to earn more interest on my savings.
I considered accounts from many of the companies on Insider’s list of best online high-yield savings accounts, including Marcus by Goldman Sachs, Capital One, and Ally. I settled on Ally because of its savings buckets and competitive APY.
I’ve had my high-yield savings account for two months now, and there are five main reasons I’m happy I took the plunge.
1. Savings buckets
One of Ally’s standout features is its savings buckets. You name different goals within the same savings account, like “Emergency Fund” or “Travel Savings,” so you can track your progress. When you deposit money into your account, you can choose between keeping it all in your main savings pot or dividing it between different buckets.
When my money was in a Chase savings account, it was a headache to figure out how much money I could apportion for different goals. With Ally, I can put aside some cash from a paycheck for an upcoming vacation, while still steadily increasing my balance directed toward my emergency fund.
Ally isn’t the only bank with savings buckets. There are several other savings accounts that cater to people trying to save for different goals.
2. Customizable dates for my savings goals
Not only can you divide up your money toward specific goals with the Ally High Yield Savings Account, but you can set deadlines for meeting those goals so you can make sure you hit them on time. This strategy has allowed me to balance both long-term and short-term financial priorities.
For example, I’ve set a goal to save enough money to pay off my student loans by September 30, 2021 — when federal student loan forbearance is set to expire — to avoid potential interest payments.
I’ve also created a goal to save enough for seats behind home plate at a Cubs game with my dad by June 5, 2021, the next time tickets are available for home games.
3. Higher interest rates
Since I was 15, I stashed away birthday money and extra cash from work in a Chase savings account, where I earned a paltry 0.01% in interest — lower than the national average of 0.06%. In comparison, the best
high-yield savings accounts
earn about 0.50% APY right now, including Ally’s savings account.
I had about $3,000 in my savings account when I decided to switch to Ally. If I left that balance untouched with Chase for one year, I would have $3,000.30. With Ally, I’d have $3,015.04, or $14.74 more.
Sure, I won’t become a millionaire overnight by moving my money…
Read More: 5 Reasons I’m Glad I Opened a High-Yield Savings Account