High Interest Savings Account

Benefits of High Interest Savings Account

If you are setting aside a nest egg of money, a high interest savings account can be of great benefit, even if you only can a small amount of money each month or payday.  You might think that only a large amount of money is worth the effort of finding a good high interest savings account.  However that is a mistake even several hundred in savings over a year starts to multiply rapidly and after six years even one or two interest points can make a huge difference in the rate of accumulation of your funds in your high interest savings account.

Some of the high interest savings accounts encourage you to leave the money by levying a penalty against you for withdrawing any of the funds within a certain number of years.  They may also incentivize you by having a bonus rate if you deposit a minimum amount each month or each calendar year.  All of these are things that play into your benefit by growing the total amount in your high interest savings account.

 

Pitfalls of High Interest Savings Account

Some of the high interest savings account have some pitfalls that can be avoided.  The first one is that some of the high interest savings account are actually mis-advertising, they are only high interest for a short time and then the rate drops radically.  So six or twelve months into your account it goes down to a normal low interest savings account.   This is barely better than keeping your money in your mattress or burying it in a hole in the ground. 

If you are investing in a high interest savings account but may need the money in case of an emergency, make sure any fees or penalties do not exceed the value of the account.  If that is the case perhaps you should consider two savings accounts. One savings account for a rainy day and one that is for long term savings that you keep in a high interest savings account.

 

 

High Interest Savings Account