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It’s no secret that interest rates on everything from auto loans to home loans have risen significantly over the past year. However, there’s a bright side to rising rates: Savings accounts have also increased their interest rates, making it easier to grow your savings.

Whether you’re stashing cash to boost your emergency fund, buy a new car, or save for a down payment on a house, consider opening a high-yield savings account. It’s an excellent option for anyone looking to stay ahead of inflation and watch their money grow effortlessly.

Here’s how a high-yield savings account can help you achieve your financial goals—and things to remember before opening one.

Benefits of High-Yield Savings Accounts

High-yield savings accounts offer a risk-free way to grow your money faster while maintaining flexible access to your funds.

• Higher Dividends: One of the main advantages of high-yield savings accounts is that they typically offer higher rates than traditional savings accounts. According to the Federal Deposit Insurance Corporation (FDIC), the average annual percentage yield (APY) on savings accounts is 0.46%. On the other hand, American Heritage’s High-Yield Savings Account rate is a very competitive 3.75% APY—more than eight times higher than the national average!
• Accelerated Growth: Thanks to the higher yield and the benefit of compound interest, a high-yield savings account can help you grow your savings faster. With compound interest, you earn dividends not only on the original amount of money you put in (called the principal) but also on the yield you’ve already earned.

   

  Here's how your savings would increase based on the rates provided above:

  	Average Savings Rate (0.46% APY)	High-Yield Savings Rate (3.75% APY)
  Initial Deposit	$1,000	$1,000
  End of Year 1	$1,004.61	$1,038.21
  End of Year 2	$1,009.24	$1,077.88
  End of Year 3	$1,013.89	$1,119.07
  End of Year 4	$1,018.56	$1,161.83
  End of Year 5	$1,023.26	$1,206.22

   

  As you can see, the high-yield savings account yielded more than $200 over the five-year period, compared to only $23 for the regular savings account without making any additional deposits. Imagine how much more you could earn over time if you saved an extra $100 each month!

• Safety and Security: The money you deposit in a high-yield savings account is insured by the federal government up to the federal limits, so there’s no risk of losing your hard-earned cash. At American Heritage, funds in a high-yield savings account are insured by the National Credit Union Administration (NCUA) up to $250,000 per member. Other financial institutions may offer insurance through the FDIC. Deposit insurance ensures that your funds are protected, so you can enjoy greater peace of mind knowing that your money is growing safely.
• Flexibility: High-yield savings accounts also offer easy access to your funds, unlike share certificates that require you to lock up your money for a certain amount of time. Maintaining liquidity is helpful if you have an unexpected expense and need to withdraw your funds. You can use online banking to transfer funds into your checking account or stop by a branch to make a withdrawal (with no penalties or fees). Some high-yield savings accounts also come with ATM cards, so you can get cash fast from your closest ATM.
• Convenience: Many high-yield savings accounts can be opened online in minutes, so you don’t need to make a special trip to the branch. You can also manage your account anytime, anywhere, using online and mobile banking tools. You can set up automatic recurring transfers from your checking account to your savings account each payday. You can also use mobile deposit to securely scan and deposit checks from your smartphone. 

Things to Consider

While a high-yield savings account can be a fantastic addition to your financial toolkit, consider these factors before opening one.

• Minimum Balance: Some high-yield savings accounts require you to maintain a minimum balance to qualify for the advertised rate. Be sure to understand the specific balance requirements and the penalties for falling below them.
• Monthly Fees: While some high-yield savings accounts are fee-free, others may charge monthly maintenance fees if certain conditions, like a minimum balance requirement, are unmet. Be sure to familiarize yourself with the fee structure of your chosen account.
• Transaction Limits: High-yield savings accounts may have limits on the number of monthly transactions, including withdrawals and transfers.
• Tiered Dividend Rates: In some cases, the rate may be tiered, meaning that the rate can vary depending on your account balance. Pay attention to the rate tiers and how they may impact your earnings.
• Introductory Rates: Some accounts offer attractive introductory rates that may decrease after a specified period. Understand whether your account has an introductory rate and how long it lasts.

Reach Your Savings Goals

American Heritage is proud to offer a variety of savings accounts designed to help you reach your financial goals. Explore our high-yield savings options and start building a brighter future today!

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