The Power of a High Yield Savings Account! 

Still better than nothing in the long run it pays off

@@trynakillsu1 It should absolutely be used for emergency savings and any money you need to keep very liquid. But my comment was just to clarify that it shouldn’t be viewed as a wealth building tool.

@@PumpkinEater33 what do you recommend putting my money into after saving 3-6 months of emergency ?

@@trynakillsu1 sorry if I made you confused. I would recommend you put it into a high yield saving or money market. I was just saying that with 4-5% APY, don’t expect to “build wealth” with that. It’s just a good place to put the emergency fund.

@@trynakillsu1 Roth IRA invested in a whole market index fund.

I don't believe that's right, if I remember what my tax guy said, interest from a bank account are "unqualified dividends" and you wouldn't be taxed on it. Unlike qualified dividends from stocks.

​@@redhawks0526 It's definitely taxed. They send you a 1099 at the end of the year. This is straight from the IRS: Savings account interest is taxed at the same rate as your earned income. The interest you earn on regular savings, high-yield savings, money market accounts or certificates of deposit is reported to the IRS on Form 1099-INT

@@redhawks0526 you need a new “tax guy”

@@redhawks0526 as everybody below says it is taxable. as an aside a qualified dividiend means it is subject to the dividend tax rates which are 0, 15 and 20%. unqualified dividends means they are subject to marginal tax rates.

Everything is taxed so that foes without saying

when was this? for your chasing account

@@masongarcia8141 CITBank is higher still.

Same with BoA but I wish I knew about this earlier on 😢

You'd be surprised. I grew up relatively poor. No one taught me anything about financial literacy because none of them knew anything. I grow up, do pretty well for myself and end up with $100,000 in savings. A REGULAR NO INTEREST SAVINGS ACCOUNT. Didn't learn about high yield accounts until a few years ago. I cringe at all the interest I lost over those past years.

It's amazing how few people know about this. My aunt was saving for my cousin (for 17 years) in a regular account, we don't have the heart to tell her.

I have 35k in my checking account. My bank offers high yield interest rates are 0.15%. I'm not sure what bank this guy is talking about with 4.75% interest.

@@bowlinbob6 There are quite a few banks with high yield savings accounts. I use Capital One and get 4.3% but there are other banks that offer higher. I just use CP because I already had an account with them. I think BMO is offering 4.8% right now. Definitely look into it, you're missing out on a couple thousand dollars in interest a year.

​@bowlinbob6 thats a standard checking savings, when you are talking high yield they are called CD'and you can't withdraw money till the end of like a 5 year contract.

Where? I have not heard of this lol..

@@brianowens889 I googled it right after watching this short to see what it was about and then I looked to see if my bank offered one and they do that’s

That’s the best thing you’ve ever done😂

@@tripleseven8328*_Hope she doesn’t have kids._*

buy Tbills urself instead, that is what the bank is doing and they are collecting the difference, and tbills are trax free

Use Sofi lol

@@andrewclark145it’s better HYS than sofi

Just Google high yeild banks. Capital one, Ally, Sofi they’re all goof

Is it really worth it tho? Like I’ve had my savings in my bank for my whole life..can anything happen to your money being in these accounts?

@@drapermike If it is FDIC (which SoFI is, look it up) insured then it is safe. Unless the government collapses and WW3 commences your money is safe.

I mean they're free to open and maintain, so there's really no risk. If SoFi decides to change their terms tomorrow and bone me, I'll move my money to a new account and stop banking with them.

It’s easy to get 30k

​@@johngibs5356huhhhhh? In what world is it "easy" to save what most people bring home in a year. 50% of Americans don't have 1k in savings, it might be easy for your upper class ass, but not for the majority.

⁠@@johngibs5356Easy to save 30k? You must live in a cardboard box. The median American salary is $57k, how will someone save 30k in a reasonable time frame making $57k?

@dengar96 even middle class people can do so; I did it on less than $25 per hour by today’s value. People should downsize, not be picky about where they live even if it means another state, get a second job, get out of debt and quit buying things they don’t need. Another $30k saved in 18 months or less. I save $10k per year from one job (with little to no overtime) and $16k per year from another job all while cash flowing school

@@nicholasselke5214 I make good money but I don’t spend any.. I still live with my parents (24) I do pay bills.. but everything else is savings.. saved more than 30k in a year.. I work extra hours… if u do it early you’ll be well off in future

Too complicated. I’ve looked into it but… secondary markets aren’t as fluid as you’d wish, so if you need money in an emergency it could cost you.

​@@amyx231Ladder in the t bills. You can survive a week without the funds. Bridge the emergency with a credit card and then pay off. Any other basic finance shortcomings you need help with?

@@amyx231 T-Bills are 100% liquid. They can be sold at any time with no penalty.

A tbill might not be liquid enough for your emergency fund

@@talialalalala Ladder into T bills. Funds will be available every single week.

why didn’t you name your 5.26% bank company

Several virtual banks. And there’s a credit union in Portland offering 5.25%.

@@Boogie2000 I was referring to 2020. I know today, 4 years later, they’re offering higher rates.

Same.

absolutely terrible idea.

Why? Too much effort for little to no result. Few hundred bucks over the course of a year

@@dayton191 it gets bigger every year...it don't stay the same like simple interest...they gotta give more at the end of every year... 10k x 0.04x04 5 times you will see in 5 years you will have over 100k in your savings and all you had to do was sit back and chill

​@@dayton191doesn't really take much effort

where?

What state?

​@@danielcastro24884discover online high yield savings is around 4.30% now, with their CD's at 5% for 12 months

Put us on

My high yield is 7.85%

I don’t get what your point is with this comment, hysa’s have no risk.

Funny considering dave ramsey is what led me here

High yield saving accounts are completely safe, especially because they are FDIC insured

It’s great to diversify your savings/investments, but don’t take away from your emergency fund to put into a CD

A high yield saving account is not the same as an investment. Your balance doesn’t go up and down with the market. The rate of return can fluctuate with the market, but it is generally significantly higher than traditional savings accounts.

Wondering the same!

CIT Bank with a 5k minimum deposit. But there are multiple other banks that offer at least 4.5%

I’m at 4.0% right now with ally

Fidelity has a bunch of money market accounts that get that. CD's (while not as liquid) can get that. I know the Marcus account is close to that

Discover is around 4.15% right now.

Only sofi does that. Most hysa like amex, marcus, wealthfront, citi, etc dont require a direct deposit

That's right

It often increases

It is not fixed. It can fluctuate over time based on market conditions, or the health of the financial institution.

Sofi and ally are the top imo

We have had marcus and ally for years

CIT bank

Synchrony has a really good one.

Ive been satisfied with capital one's 360 high yield. I also like their creditwise service

Annually but you get a payment every month

Compounded daily, applied monthly

You can have immediate access in hysa as well. I use sofi with 4.6% savings account. All you need is direct deposit or $5k min balance otherwise is like 2% or so

Betterment

Don't know about betterment might be a better option but I use sofi. 4.6% with direct deposit or $5k deposit in first month. Even 0.5% on checking account

Just google high yield savings account. There are tons of them above 4 right now. Pretty much every one honestly

Discover is a great one. Im with them.

Capital One 360, 4.3% APY

@@liptongtr CITBank. They also have 6 month 5% CDs.

Lending club HYSA 4.75%

Regulation D was paused during covid and remains that way. Most banks don't enforce it these days. You can move money from checking to savings and vice versa as many times as you need

Capital one has a pretty good one

Your emergency fund should be easily accessible stable cash.

@@TheJeanean it is stable. the risk is "breaking the buck" . in the past when it happened they got 97 cents on the dollar before they were made whole. 2 days is not soon enough to get it in the bank? leave a little in your checking and put the rest in a money market fund. for a lot of people including us we pay by credit card and then pay off monthly so the 2 day wait is not significant. some may still allow you to write checks from it.

@@frankthefkintank 31 basis points for me is significant if you are going to the trouble of opening a new account anyway. the difference may not be that big if the current account you have is already at 4.75%. it will always have a higher yield than a banks high yield savings account for the same interest rate environment. over years the difference adds up. heck even with my sweep brokerage account vs the cash reserves money market fund where the difference is .01% less in the sweep account i'll push funds off the sweep and into the cash reserves unless i have the sweep funds on standby pending an open order.

Actually 5.4% and no state taxes 🤑🤑🤑

Ladder in the funds if the 4 week gap scares you.

I just put my 401k into S&P500.

@@Redmow51 if you are smart with money and finances you should utilize your credit card first then you can pay it off at a more stable point in your life and in the economy that's if the market tanked your savings then you give it time to recover

@@frankthefkintank i agree but stocks arent the move imo is all im saying

Maybe for a brief time but in the long run, no

@nicholasselke5214 nah it would only get worse long term even best you make a couple percent after inflation

I also have synchrony I have $50,000 in it

4.75% at LendingClub

Do you have to have a checking account to open one up with Synchrony and can you withdraw ?

Ally is 4% even. Other banks have slightly higher rates, but with the other benefits involved I prefer ally.

CIT is 4.95%

​@@jeremyduncan-martinez2684vanguard money market fund is currently 5.06%

It's meant to be emergency money. There's definitely better places for a much greater return but you won't have immediate access to the funds

I have Robinhood. $5 a month to access their high yield brokerage account feature. I Can take the money out as i please- no penalties. Of course I gotta pay taxes though. I make a little under $2 a day.

Sofi 4.6% no fees or limitations

capital one has a 4.3%

Build your emergency fund before investing anything. And live on only absolute necessities until you are both out of debt and have a fully funded emergency fund. The cost of living isn’t really that bad in most places if you don’t have consumer debt

plenty of options. sofi and ally come to mind. just google best high yield savings accounts

Honestly I've always had capital one and theres is 4.3% interest

Google

Sofi 4.6% with direct deposit

The point of a high yield savings account is to keep up just above inflation and to have that cash quickly available in case of emergency. Your emergency fund should ideally be between three and six months of your minimum expenditures, but definitely no more than twelve months

You'll need 6 figures to really notice a change. If you have 6 months of expenses already I'd suggest investing in roth ira and individual brokerage accounts

Capital One

Sofi 4.6% with direct deposit

Some HYSA can be accessed w a debit card

@@SaveEuropa1488 I’m doing capital one , Although is not the highest return I feel like it’s safe there

Most will either require a minimum balance or at least direct deposit for the higher 4%+ rates. There's lots of different hysa types though

Why would you not have your emergency fund sitting in a high yield saving account? They are liquid and very safe. Also FDIC insured, so if the bank fails you are still covered up to FDIC limit, which is much more than 30k.

@PumpkinEater33 I think he’s suggesting he will never be able to save $30k period. I love looking at one’s budget and watching them get overly defensive when I tell them what can be cut out of it. The only things people actually need are food, utilities, a home, transportation and maybe a cell phone. Everything else can be dropped until one is fully financially stable, and that includes getting out of debt

If you dont have an emergency or can build a new emergency fund while that one is locked up, do it.

Just drop that emergency fund in a money market fund with vanguard, VMFXX. Currently at 5.06% 7 day SEC yield.

@@classics-wz1bzit’s not an emergency fund if you cannot get to it

There is no penalty for withdrawing from a HYSA. There is one for withdrawing from a CD early. And most HYSA’s have no fees as long as you start with $5,000 and never let the balance drop below $2,500. The entire point is not as an investment, but to keep up a little bit above inflation so you’ll always have 3-6 months of expenses stashed away

No, they are a little bit different. Normally with a CD. There is a fixed rate that you lock in at. And you have to wait until the CD reaches Maturity until you can cash out. A high yield Savings account can have a variable rate. But has more flexibility if you need to access your money. You can withdraw whenever.

Sofi 4.6%

False- That’s a CD - high yield savings accounts do not have holding periods.

If I had that and a paid off house, I could live off the interest alone

You need to change something

Takes time, not everyone ever has that much laying around, for me it took taking jobs I don’t enjoy, maybe I got life wrong, maybe it’s better to have less money and more sense of fulfillment, statistically I won’t live as long given the high stress environment I work in, money isn’t everything, but it is nice to have

@@Moneykingkevo you would only get $50 in a year - sorry bud

@@patriotsforegolf9859 I said after year 1....year 2 you get 500 sorry bud

@@Moneykingkevo Year 2 you'd only get about $51 or $52, not $500.

Where is there something better?

​@@supreme5580in countries with higher rates. I live in Chile......rates here for savings are between 9% and 11% annual.

​@@jamesrenaud592having a high interest rate for savings means that loan interest rates are just as high, otherwise it wouldn't make sense for banks to lend out money, so you're telling me banks have personal loans and mortgages for probably 15-20% in Chile?

@@classics-wz1bz in Chile there is an accounting unit called 'UF' (Google it) to represent inflation (whatever that is, whether it's high or low). There's a spread so usually mortgages are like UF + 4% (for example) since they are long term. Short term personal loans yes are like 20%-25% right now. The monetary policy rate set by the Chilean Central Bank is currently 11.25%, it's been that high since October in order to kill inflation. It seems to be working so the market expects them to reverse course and start cutting soon. Right now is a sweet spot if you have any capital to spare, you can get a CD for like 10%, which is a positive real rate since inflation has now fallen below that.

@@jamesrenaud592 see my point above, there's a reason you have such a high savings rate, it's that those loan rates are insane.

Emergency fund is not intended to be a long term investment strategy. Invest into the S&P 500 consistently (preferably around 15% of your income) and live off less than you make I have two HYSA’s, one being my emergency fund and the other being my car fund. Every time I buy a car, I go to the financing department to figure out how much the payment would be. Then I pay cash for the car and move that equivalent payment amount into the car fund every month, of which I use only for car related expenses like maintenance, repairs, registration, insurance and buying another car when I’m ready. The other is my emergency fund, which I put in an extra $5k each year. The rest of my investments are in treasury bonds and S&P 500 mutual funds It also helps that I chose to live in one of the least expensive areas of the country and continued to look for places that were cheaper, all the while not having any consumer debt. And getting a second job even though I can pay the bills and max out my 401k contributions with one job; the second job is all extra Mainly, people need to be willing to make sacrifices

That's just emergency fund. It's not intended to be a great return, just enough to keep with inflation really. Follow their financial order of operations 👍

Get a second job and don’t spend any money on things that aren’t absolute necessities until you save $30k. Have a car payment? Student loan debt? Get them paid off with that extra money first

Do you have a monthly budget?

Wells Fargo for one.

BofA

You're taking on inherent risk though. What if the market crashes and you have an immediate emergency expense? You probably don't need to keep 30k in an emergency fund, but having some amount of cash immediately available is generally advised.