High Yield Savings?

[Whitechapel]

Hello,

I was wondering what a good high yield savings account would be for someone who is terrible at saving right now? Someone on this board had mentioned American Express because they're offering 1.00%. But I wanted to come here and see some suggestions. I don't know the downfalls of a high yield account other than the interest accrued would be more? Can someone please explain to me why I'd want one?

[cooliemae]

I guess my question back would be why wouldn't you want a high interest savings account?

[bjl584]

Check out the Sticky Thread at the top of this subforum.

[Whitechapel]

Check out the Sticky Thread at the top of this subforum.

Okie doke, sorry for not checking first.

[SeanH]

Hi - You'll find that thread is enormous and goes back forever. Putting the word "High" in front of it needs some perspective. In the not so distant past, before the world fell apart, you could get 5+% interest from a checking account at the right banks and 7-8% returns on CDs and such which are risk free. With those sort of numbers a saver could be rewarded with no risk, healthy returns. Rewards have fallen tremendously. A number of online banks offer ~1%. If you search around you may be able to find a small bank or savings and loan that offers more. I am receiving 2.5% from a local bank that I found on a website called checkingfinder.com. In short - high is just a reflection of the times. As many large banks offer sub 1% returns, 1% right now qualifies as high.

[MonkeyMama]

Actually, the sticky at the top of the page is not terrible useful (old info).

In the past I have used bankrate.com to sniff out higher interest rates. Couple that with google searches for positive reviews. I don't bank anywhere that has PILES of complaints.

One thing I also try to avoid is very short-term promotional rates. I don't want to jump bank to bank every few months. For example, my mortgage company has had a 2%+ promotion but that has only lasted a few months out of the last 3 years or so. The sticky at the top of the page is good for sniffing out who has had consistently higher interest rates (Ally comes to mind - is one bank I have chosen, myself). There are certainly others.

Always check the fees and the minimum you need to keep in the bank to avoid fees, etc. I generally aim for $0 fee and $1 minimums. Plenty of those type accounts abound. Read all the fine print. If someone was offering 5%, today, I might be able to overlook some fees and minimums (I'd have to figure the cost versus the reward). 1% is difficult enough to find, these days.

Good Luck!

[bjl584]

To answer your original question:

Having some money in a high yield saving is important to any financial plan. Your money will earn some interest (granted not much, but more than it would in a jar buried out back), it is federal insured, and you have almost instant access to it should you need it.

[SA Saver]

I like Smartypig, 1.10% APY.

[maat55]

You might check your local banks for a high yield checking account. I had been getting 4.1%, it will be reduced to 3.1% next month. These payouts usually come with debit card swipe requirements(mine is 12 per month).

[skydivingchic]

Normally I would agree maat. I have a similar checking account as well as a linked savings account that earns good returns. However, reading OP's threads it is clear that he has a spending problem, so any additional returns from a high yield checking account (and more) are likely to be wiped out by his spending. I have my EF and some personal savings in these types of accounts, but it works because I don't look at the big balance and go on spending sprees. Instead I look at my spending envelope balances to determine if I can afford something. If I simply looked at my account balances, I would have that Mini Cooper I've been lusting after for years sitting in my driveway.

OP - there are any number of online savings accounts that would work for you. As has been stated, "high interest" these days means ~1% on savings. That can be had a Capital One, Ally, ING, etc.

[jpg7n16]

However, reading OP's threads it is clear that he has a spending problem, so any additional returns from a high yield checking account (and more) are likely to be wiped out by his spending.

I don't understand this.

Boss -- Would you like a raise?
Emp -- No, I'd likely just spend it all anyways.

Although OP needs to reduce his expenses, that is a separate issue from earning more on the savings account. Preferrably he'd do both, earn more and spend less.

[skydivingchic]

I don't understand this.

Boss -- Would you like a raise?
Emp -- No, I'd likely just spend it all anyways.

Although OP needs to reduce his expenses, that is a separate issue from earning more on the savings account. Preferrably he'd do both, earn more and spend less.

Yes, of course it would be better if OP would earn more and spend less. My point is that the type of account maat is referring to is a CHECKING account, which requires a certain number of debit card purchases each and every month to earn the higher returns.

For someone who has spending issues, I believe it would be much better to have a completely separate savings account - kind of out of sight out of mind. It would likely be too tempting for someone with a spending problem to see a large balance in their checking account (due to the savings they have parked there to earn higher returns) and not spend it.

I have enough money sitting in my high yield checking and savings accounts to pay cash for a brand new Mini Cooper. But most of that money is my EF and other parts of it are for my sinking fund things like vehicle registration, vehicle maintenance, medical expenses, etc. Only a very small portion of it is money I can spend however I like. It works for me because I don't look at the total balance - just the balance in each of my spending envelopes before making spending decisions.

Let's say OP is able to save up $1000 for a starter EF. The difference between keeping that money in a typical high yield savings account at 1% vs a high yield checking account at 3% is $20 over a year. For someone like the OP, I simply don't think that the extra $20 is worth the temptation every time he looks at his account balance. Once spending is under control and attitudes have changed, yes, these types of accounts would be a great option to earn some more money. Its the same reason I don't recommend people with spending issues transfer the balance of a CC from one with higher interest to lower interest. Fix the spending problem FIRST, and prove for at least several months that it is indeed fixed, before opening a new card and transferring to a lower interest rate. Otherwise the likely outcome is simply a card with the transferred balance at a low promotional rate and the original card with a balance that gets run up again because the root problem was never addressed.

[orenwach]

Consumers Credit Union -4.02% for Checking Account

You want to check out Consumers Credit Union. They are offering 4.02% interest rate on a checking account right now. It comes with special rules like requiring you to make 12 debit card purchases a month and some other annoying ones too but their rate is higher than almost anything I have seen out there.