It’s safe to say that everyone would like to gain more money over time without having to put in too much effort.
Earning interest on money just sitting in savings accounts can fulfill that goal, per financial experts. Picking the right savings accounts can help you grow your money in a no-risk and straightforward way.
In general, high-yield savings accounts, money market accounts, and certificates of deposit, or CDs, are good options if you’re looking to earn interest on your money year after year.
High-yield savings accounts usually offer the best combination of interest and liquidity, according to financial advisers.
How do I grow interest on my savings account?
The beauty of a high-yield savings account is that once the money is settled into the account, it will start growing on its own by collecting interest.
The hardest part is the legwork of finding the right account for you, which is typically the one with the best rates, the lowest fees and the most flexibility regarding deposits and withdrawals, according to Forbes.
To help you find the best high-yield savings account for you, Forbes offers a list that searchable by ZIP code and deposit amount.
Banks in Salt Lake City such as CIT Bank, EverBank and Basik Bank are offering more than 5% interest on high-yield savings accounts, per Forbes.
Why do banks pay interest on savings accounts?
Essentially, when someone deposits money into a bank or credit union they are allowing the institution to lend money to other customers through loans like credit cards and mortgages, per Capital One.
How often is interest paid on a savings account?
Many high-yield savings accounts earn interest daily but the interest is only paid out monthly, per Capital One.
An advertised APY or “annual percentage yield” is usually slightly higher than the interest rate but tells customers how much to expect after a year, reported The Wall Street Journal.
When choosing a savings account, make sure to ask your bank to explain its policy on interest.
Is there a downside to a high-yield savings account?
There are two potential downsides of a high-yield savings account, according to Chase.
1. Unsteady earning: A high-yield savings account’s interest may fluctuate depending on the market.
2. Limited withdrawals: Some high-yield savings accounts limit the amount of times a customer can withdraw or transfer from the account during the month, and some even charge fees