That’s right – American Express offers more than just credit cards. They also offer a way to save money – by way of an actual savings account. This was news to me as well until recently.
I want to start this article by saying that this is an article for personal finance perfectionists. Why? Because the interest rate environment is still very poor for us savers. Savings account interest rates don’t vary much. One bank may offer .5% and another .7%. Trying to get the very best rate possible won’t make a difference in your quality of life. However, if you are a savings perfectionist, keep reading. It’s still smart to maximize your dollar. After all, once you get into a high-yield savings account, the income you generating is passive. Passive income is worth the effort to get rolling.
We’ll review this American Express savings account to see what it has to offer. Is it worth leaving the comfort and convenience of your current bank? Let’s see.
Let’s get the deal breakers out of the way…
First off, the account is backed by the FDIC. Should AmEx suddenly file for bankruptcy, you can still get to your money. Second, you do not need an American Express credit card to open a savings account. That’s a relief for those of us who don’t want to apply for yet another credit card. Third, it is an online only bank account. This means you cannot deposit physical money into this account – no way, no how. This means you’ll still need another account for depositing paper checks and cash. Better yet, go electronic. Fourth, the current interest rate (the day this post is being published) on this account is .90% APY. That’s a phenomenal rate by today’s standards. This rate is about competitive as it gets although Ally does offer a slightly better rate at .99% APY.
If you’re anything like me, those were your 4 biggest questions answered. But there are a still a few more issues to cover.
You can reach customer service 24/7 via phone or web. You can also setup alerts so you automatically get notified when something with your account changes – no need to call. Customer service quality appears to be just fine based on the anecdotal evidence to be found on the web. Even if it’s not – you likely won’t need to ever talk with a human being anyway. Remember, this is no brick-and-mortar bank. Online banks save money by not needing to hire staff to field calls. So if you do ever call and wait, understand that this minor inconvenience is how you get such a phenomenal interest rate.
Hidden Fees and Other Annoyances
There are NO fees to open or maintain an account. You only need $1 to open and there’s no minimum balance required. Most high-yield savings accounts require you to keep a minimum amount. This is a hassle but it’s how those other banks make money off your money – they lend it out. It doesn’t do them much good to only lend out $1. However, American Express makes its money off credit cards. They can offer this great rate because of that, apparently. It’s kind of like how the state of Florida doesn’t have state income tax because of the revenue Disney World generates.
Applying for this high-yield savings account is as simple as any other.
There are no gotcha’s. I personally haven’t signed up for this account (I use Ally for savings) but I know someone who has gone through the process. He said it’s easy and straightforward. He said it look less than 5 minutes.
Final Thoughts about the American Express High-Yield Savings Account
This savings account is very good. I’ve read about this account for quite a long time and I didn’t uncover anything unsettling. The two competitors in this high-yield savings account world are Ally Bank and American Express. Choose which one works for you. Ally weighs in at a slightly heftier .99% APY. American Express weighs in at .90% APY. Expect a post about the Ally savings account. It’ll get published shortly.
Click here to read 70 customer reviews for the American Express high-yield savings account. Let us know what you decide!