High Interest Savings AccountFinancial Dictionary -> Banking -> High Interest Savings Account
Of course, you want the best interest rates on offer as you will get a higher return on your investment as well.
Opening a savings account can be of help and a wise decision when you have financial goals, e.g. you plan to purchase a house, save for college education, and the like. It is also a good idea to have a high interest savings account when you aim at paying off your credit cards.
More Restrictions, Higher Interest Rates
Along with deposit savings, a type of account you may open is the regular savings account. The latter comes with a higher interest rate but more restrictions on the amount you can deposit.
The regular savings requires that you make monthly deposits. As another restriction, you should meet the minimum savings amount, and you don't have to fall below this threshold or else, you loose interest payments. Of course, you may deposit more than the set amount per month.
The deposit savings account comes with smaller interest rates and is more flexible. One of its benefits is that your access to funds is not limited.
Online Banks Offer High Interest Rates
As of recently, there is a large number of online providers and online banks that offer higher interest rates compared to traditional banks. The list of popular online banks includes: HSBC Advance, ING Direct, SullieMae, and FNBO Direct.
Some examples of high interest savings account on offer are those at Ally Bank, American Express Bank, Capital One Bank, Discover Bank, and HSBC Bank. The savings account at Capital One Bank comes with an APY of 1.35 percent, a minimum deposit of $1000, and no monthly fees. Check writing is not available. The savings account offered by American Express Bank goes with an APY of 1.30 percent, no minimum deposit, no monthly fees or check writing. At Ally Bank, clients can open a savings account that comes with an APY of 1.25 percent, no minimum deposit and $0 monthly service fees. Customers of Discover Bank also enjoy a high APY of 1.35, and the account comes with a minimum deposit of $500 and no monthly service fees. Finally, HSBC Bank offers a savings account with 1.10 percent APY, minimum deposit of $1, and no monthly service charges. If these offers are not attractive enough or you prefer dealing with a rank-and-file bank, check savings accounts at your local bank or credit union.
The reason why online banks offer high interest rates is that they don't have to maintain offices and branches, with rent increasing the cost of services. Compared to some rank-and-file banks, online banking does not require the use of paper bank statements or Automated Teller Machines, as transactions are carried out in the online space.
Helpful tips in opening high interest rate savings account
Before you open a high interest rate savings account, you need to do some prior research. Most banks have their own customer service representatives who can assist you along the process. Ask for the required documents, any fees or charges, minimum amount, other restrictions, etc.