One of the many things that I stand upon within the area of savings is a High-Yield Savings (HYS) Account. The core of why so many people (myself included) have endorsed this product is due to the APY (Annual Percentage Yield). For the last couple of years they have held strong around 1.5% and up. Compared to those regular degular savings accounts giving you 0.01%, you can see the easy advantage - right?! The higher the account’s APY, the faster your savings will grow as you flip money into it. But... the percentage is always fluctuating.
If you have a HYS, you might’ve noticed that your financial institutions have been sending you emails letting you know that pretty little APY has been lowered (yet again). But why tho?! Well since this transition into economic uncertainty, recession + Rona Mae Jenkins, the Federal Reserve's (The Feds) have lowered the federal interest rate to help restore the economy. *Inserts Florida Evans Damn Damn Damn* Again- why tho?!
While The Feds lowering the interest rates were great for buyers, it has been jacked for savers (or has it..).. Here’s so tea for you -- your banking institution uses the Fed interest rate as a benchmark for savings account yields; especially HYS accounts. When the Fed rate decreases, the interest rate on your high-yield savings account will also likely decrease. Ghetto.
Let’s take a bit of a look at HYS accounts and the interesting part about them. Just as you have been receiving those emails about the APY being lowered, I am sure that before all of this you were getting emails about them going up. I know I did. So, what makes them go up and down like a rollercoaster? I know it can feel like a toxic relationship. Many people have been reaching out to me saying that they felt that the regular degular savings accounts appeared to be safer due to the lackluster interest hanging tough. Nah.
They might be down and out a bit currently, but as the economy rebounds like Wilt Chamberlain - so will your HYS and accounts like these. Soooo, no matter what and how this economy fairs - HYS will have more ‘books’ than a regular savings account. I would still flip my money into a HYS no matter how the ocean moves. Why? It will still be more APY than that regular savings account!
So, like the great philosopher states - Uncle Luke Skyywalker Campbell states -- Don’t Stop.. Get It, Get It.. Especially when it comes to saving and utilizing HYS accounts! Here is why you should still be flipping your funds into them -
Saving should not only be a goal, but a habit: While the APY is dope, you need to get into the habit of saving. My love with saving came from me waiting to move in 2 months (furnished and all). That focus + discipline made saving into a habit of mine. The same for you. APY is important to see the growth quickly, but the disciple within the habit will make you see the importance of the practice.
Even when the APY drops, they will not drop that low: Like said a bit up, HYS can go up and down like a rollercoaster. But what is key for you to know is how much does that HYS you are looking into hold its interest. When the rest of the ‘crowd’ is going down, watch to see if yours is holding on. My favorites, Marcus + Ally, do a great job of communicating change and holding that interest. They are still higher than that 0.01%, so technically they are still considered a High-Yield Savings Account.
There are other options: If you are looking into other means to save for the long-term, CDs (Certificates of Deposits). When you snatch a CD - you agree to leave your money in the CD for a set time period (the maturity date). During this time, the CD earns interest and once it matures, you can withdraw your initial savings along with the interest earned. The interest on it doesn’t go up and down.
Another option for you to consider are Money Market Accounts! They usually hold a stronger interest rate along with offering a limited number of checks and debit-card transactions per month. CDs usually are good for long term playing + money market accounts can be a good alternative. Note - there are usually minimum deposit requirements for opening a money market account or for getting the best annual percentage yield (APY). Ask questions before snatching!
Short - Term Bonds are good for those who know they aren’t going to ‘tap in’ with their stacks for a while. Why am I recommending them? With The Federal Interest going down, the bond rates are better right now! For most bonds, they require you to leave the funds there for at least 5 years or so!
High - Yield Savings accounts are still a great way to stack your coints! Stop slacking and research what bank offers match your tolerance level. Be mindful of the 3 point that were talked about above, especially #2! When those APYs start slipping, don’t start tripping. Don’t Stop.. Get It, Get It… keep saving in High Yield Savings Accounts!
