Pros and Cons of a High Yield Savings

Find out the pros and cons of a high yield savings account

Many of like to save our money and what makes saving money even better is when you can get a nice return on your money while it’s just sitting there.  If you’re like me and you love to have a guaranteed return, you may find yourself turning to either a certificate of deposit (CD) or a high yield savings account.  While a high yield savings account has both its pros and cons, I wouldn’t count it out while you’re looking to invest your money somewhere.

Look at the cons with high yield savings

Rates aren’t guaranteed

Unlike a CD, a money market or savings account doesn’t have a guaranteed rate.  You could apply for an account one day and a few weeks later the account rate could drop a whole rate.  This is what turns a lot of people off by it.  A nice way of checking to see who has had the most consistent rate for the past couple months is by checking GOtalkmoney’s top ten money market chart.  On the chart, you’re able to see how long they’ve been in the top ten consistently.

Limited access to money

With a money market account ,most banks only allow you to access and create checks only a few times per month.  If you’re a heavy user with your savings account, you probably won’t want to keep all of your cash in this account.  Instead, you’ll want to keep money in there that you won’t touch for a while.  If you find yourself cutting out checks more than the bank allows, you’ll find yourself getting a penalty from the banking institution.

Looking at the pros with high yield savings

Higher rates than your normal banks

If you look at your local banking institution savings account and see how much they are giving you back on your money, you’ll be surprised to see how little you’re making on your money.  The nice thing about a money market account is that you’re going to be able to make a lot more on your money compared to traditional savings account at your local bank.

Acts like a bank’s saving account

With a money market account, you’ll find that it acts just like as a savings account but as I mentioned above, you’ll only be able to make so many transactions per month.  When you do sign up for a high yield savings account, most banks will grant you access to an ATM card, a check book and many other goodies that you can use with your account.

In the long run, if you’re currently having your money just sit in a traditional savings account, I would highly advise you move it to a money market account.  This way, you’ll be able to get a lot more on your money.  Just remember to search around for the best rates possible before you just hop on the first rate you’ll see.

Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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