Are you considering stashing away some money in a high-yield savings account?
It’s not a bad idea, given that more than a few leading indicators – most notably the flattening yield curve - suggest that our economy may suffer a setback in the near future.
This week, the Federal Reserve updated its findings from the latest Survey of Housing Economics and Decision-making (the “SHED”). Once again, they concluded that a substantial number of American households have little or no liquid assets. According to the Fed, 39 percent of American households would struggle to tap funds necessary to cover $400 in unexpected expenses. Twenty-seven percent would borrow and 12 percent would have to sell something.
Thus, this list aims to speak to those households. Think of it as the account for “the rest of us.” If you have $25,000 to set aside for six months, there might be other lists that present better options. However, if you fall outside of that segment of the population, this list is for you. I’ve compared the interest rates available to people who set aside only $100 to their savings account.
1. Comenity Direct High Yield Savings pays 2.45 percent. There is a $100 minimum opening deposit.
2. HSBC Direct, Marcus by Goldman Sachs, and Synchrony High-Yield Savings pay 2.25 percent on savings. At HSBC, you will have to make an initial deposit when you open the account. These rates led my survey.
3. Ally Online Savings Account and Barclay’s Online Savings Account follow closely behind at 2.2 percent. Neither requires an initial deposit.
4. First National Bank of Omaha’s Online Savings Account currently pays 2.20 percent (APY), regardless of the average balance. You must make a deposit of at least $1 when you establish the account.
5. The Empower Savings Account, available via WiseWage, pays 2.15 percent. Again, there is no deposit necessary to open the account. During your first month, Empower will pay 4.3 percent on savings. Outstanding!
6. The Varo Money Savings Account, also available at WiseWage, pays 2.12 percent with no account opening requirement.
7. American Express High-Yield Savings and Discover Bank Savings pay 2.1 percent.
8. Axos High-Yield Savings pays 1.3 percent.
9. The CIT Savings Builder pays 1.17 percent. You must deposit $100 to open the account.
10. Capital One 360 pays 1 percent.
About my methods:
I put weight on accounts that can be opened without a direct deposit. I like when a good intention can become a new practice, so I am against any additional steps between inspiration and success.
The interest rates listed on this site were accurate on June 3rd, 2019. On that day, CNBC quoted the yield on 10-year Treasury notes at 2.07 percent. Over the previous month, rates on 10-year Treasury Bonds fell almost 20 percent. Analysts attributed the change to geopolitical concerns associated with the United States’ accelerating trade disputes with China and Mexico. Retail savings rates tend to follow from the price of ten-year Treasuries, so all things being equal, it is likely that rates for high-yield savings accounts will drop accordingly.
I have excluded some accounts with high fees. For example, Banesco Online Savings currently pays 2.42 percent. You can open the account with a $100 deposit. However, if your balance falls below $300, you will have to pay a $5 fee. I strongly recommend against savings accounts that apply a fee of any kind.
FNB’s First Rate Money Market Savings pays 4/100ths of one percent interest. FNB pays 2.01 percent for accounts that put down more than $25,000.
Citibank CitiAccelerate Savings pays 4/100ths of one percent. There is a $4.50 monthly fee associated with the account, so you will have to set aside $1,125 before you net your first penny in real interest. Citibank pays 2.36 percent on high-dollar deposits.
BBVA Compass’ ClearChoice Money Market Account currently pays 2.4 percent APY interest on balances of more than $10,000. The APY is 2 percent on accounts with less than $10,000 in daily balances. There can also be monthly fees in some cases.
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