Put Your Money In A High Yield Savings Account
A high-yield savings account is a type of savings account that typically offers a higher interest rate than a traditional savings account. This means that you can earn more money on the money you deposit into the account. The higher interest rate can make a big difference over time, particularly if you are saving for a mid-term goal. These are great for saving money for emergency funds, planning a large trip in a few years, or trying to earn interest on the money that you need, but don't need today.
Which One Do You Recommend?
Each high-yield account has it's own pros and cons and depending on the time it really changes as to which company is the best company to use. I recommend looking to see if there is a high-yield account at a company you already use first. If they don't have a high-yield account available, then look and see which high-yield savings account companies offer the best features for you. My personal favorites are Wealthfront and Ally. I've heard a LOT of good things about Discover's high-yield savings account as well. Notice I don't provide affiliate links to these companies, because I can't recommend them to you without knowing your situation, but these are the three that I have heard positive things about or personally use.
Some high-yield savings accounts also offer other features, such as the ability to set up automatic transfers or to link the account to a checking account to make it easier to manage your money. Some high-yield savings account also have FDIC insurance coverage. I don't recommend looking into any high-yield savings accounts that are not FDIC insured. You want to make sure your money is protected.
Interest Rates Will Change
It's worth noting that the interest rate on high-yield savings accounts can change over time and is typically tied to the Federal Reserve's benchmark interest rate. So when the rate goes up, the interest rate on a high-yield savings account will likely go up as well, and when the rate goes down, the interest rate on the account will likely go down as well. Even when rates were really low, they high-yield savings accounts were still outperforming traditional bank savings accounts.
High-yield savings accounts are a good option for anyone who wants to earn more interest on their savings and has money that they don't need to access frequently. Most can take a few days to a week to transfer money between accounts. Some do offer same-day transfrers with Zelle or with a small fee.
It's important to compare the offers of different financial institutions before opening a high-yield savings account, as the interest rates and fees can vary widely. Some banks or credit unions may offer better terms than others. I would also steer clear of the companies that require you to jump through hoops in order for you to get their "best" interest rate
Watch Out For Fees
Make sure you check out the fee schedule to ensure that you don't get stuck paying fees which will wipe out your returns. There are some that charge a monthly fee. Even a $5 / month fee will eat through your earnings.