High-yield savings accounts are recommended by plenty of financial advisors as among the most secure and stable low-risk investments. However, you really can’t expect to gain much with this type of investment because the interest rates are relatively low. As the saying goes: low risk, low reward. Therefore, given that high-yield savings accounts inherently feature low risk, the potential earnings you can gain are going to be that much lower.
However, that is not to say that high-yield savings accounts are not worthwhile or profitable. For example, a UFB Direct high-yield savings account could lead you to earn thousands of dollars due to their market-topping interest rates. You just need to know a few key steps on how you can maximize your earnings. In this article, we are going to help you with just that.
Here are a few steps you can do to maximize your earnings with high-yield savings accounts:
- Shop around and compare interest rates – Most, if not all, of the banks and credit unions that offer high-yield savings accounts typically compete on their interest rates offer. A lot of times, the competition on interest rates goes by the decimal. Even though the initial differences may be marginal at best, the earnings you can gain by going for the highest interest rate are going to add up to be quite considerable over the course of the investment period. This is because the earnings you gain from this type of investment are going to be compounded. Effectively, the interest rate is going to be applied not only to the capital but also to the earnings you have made during the previous period.
- Meet minimum deposit requirements – The main difference between high-yield savings accounts and traditional savings accounts is that the former typically comes with higher minimum deposit requirements. Oftentimes, this minimum deposit requirement will dictate whether or not an investor will qualify for the highest interest rate offer. Thus, if you really want to maximize your earnings, be sure to follow the minimum balance requirements and try to go for the highest initial deposit available.
- Avoid fees – Fees and charges are your number one enemy when it comes to these types of investments. A lot of times, people forget about the agreement that they have with the bank or credit union, which results in them paying tons and tons of money for fees and charges. Eventually, these small fees will all add up, diminishing your earnings slowly but surely. Thus, it’s in your best interest to avoid paying fees and charges as much as possible. To do this, you must constantly follow the policies required of you by the bank, such as minimum deposit requirements, maintaining balance requirements, transaction limits, etc.
- Look for those offers with high compounding frequency – As mentioned above, high-yield savings accounts are typically applied compounded interest. One key thing you can do to further take advantage of high-yield savings accounts is to have one with a high compounding frequency. This just means that the rate at which interest payments are made is going to be a lot more frequent. Ideally, you would want to have a high-yield savings account that pays out each and every month so as to maximize your earnings.
- Take advantage of bonuses – Plenty of banks also offer bonuses for different things, such as referrals. For example, you could share links with your friends or family members to try and invite them to open an account with the bank that you’re working with or to start a high-yield savings account. Bonuses could either be in the form of direct deposits, credit deductions, discount codes, or some other form of reward or compensation. This strategy is going to be most effective with newer companies or banks because it’s also in their best interest to widen their customer base. Thus, this type of arrangement will be mutualistically beneficial for both parties.