The Difference Between Traditional and High-Yield Savings Account

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Consider this.

A high-yield savings account is not some fancy term for a traditional savings account. The high-yield account has utility for growing money, whereas the standard account has none. 

If you’re trying to save money, nothing can be more disheartening than seeing very little change in your account balance beyond the money you’re putting in. At that rate, you may as well stash the cash at home, where you’ll be earning 0% interest. But, before you withdraw your savings or give up on it entirely, consider the high yield savings account.

The primary difference between the traditional savings account and the high-yield account is the annual percentage yield. However, they also differ in function: one is intended for daily use, the other for savings.

The annual percentage yield is the amount of interest earned per year on the money you’ve saved.

In a traditional savings account, this figure is minuscule at 0.05% compared to the 0.55% for high-yield accounts.

Traditional savings accounts are developed for daily use, meaning you pay a monthly bank fee in addition to other bank charges to transact. The purpose of the high-yield savings account is to help grow your savings, which is why these accounts usually don’t have any fees. 

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