Is it worth it to open a high yield savings account in 2013?

May 27, 2013 3:33 PM

Are they good for using as a nest egg of sorts (e.g. money to live on when I'm in between freelance gigs) or for saving up for something specific (a vacation, Invisalign braces, etc.)?

I've been pondering the idea of opening up one ever since I got an offer from AMEX - I'm particularly interested in theirs since they have no fees and no minimum balance. Are they significantly better than old school checking/savings accounts? Do you have a HYSA you'd recommend? Thanks! :)

posted by Anima Mundi to Work & Money (11 answers total)

Interest rates are low right now, and I wouldn't describe anything available as a "high-yield savings account." You can find the best rates at bankrate.com. Right now, Everbank.com has a promotional 1.25% rate for the first six months.
posted by grouse at 3:39 PM on May 27, 2013 [2 favorites]

The AMEX high yield account is 0.85%, so if you put $10,000 in it for a year, you will make $85. This is better than the couple of bucks you would earn at a plain vanilla Bank of America savings account.

Only you can decide if $85 a year on $10,000 is worth the effort of setting up a new bank account.
posted by JackFlash at 3:46 PM on May 27, 2013

My credit union offers rewards checking with a higher APY (~2%) than any "high interest" savings account you'll be able to find these days. It has some easily-met requirements, such as 12 debit transactions and a direct deposit each month.

It may be worth seeing if your area has anything similar.
posted by alligatorman at 3:47 PM on May 27, 2013

Best answer: I use a "high yield" savings account (I think it's at .85% right now through Ally Bank) for money that i want to save but that needs to be rather liquid - basically, saving for home improvement, emergency expenses and once-a-year expenses like car/house insurance and property tax payments. I don't quite save enough money each year to qualify for high-interest checking accounts, nor do I want the hassle of negotiating the other requirements.
posted by muddgirl at 4:11 PM on May 27, 2013

It depends on the amount you want to put into the account. Accounts like these often have maximum amounts that you can keep at the higher interest rate, i.e. $20,000. Any amount above that maximum will only earn interest at the very low rate of a regular checking/savings account, typically.

Back in the day I used to have a rewards checking account with my local credit union requiring X number of debit transactions and a direct deposit, and I was earning 6% on it (max limit was $20K). I definitely thought that was worthwhile, it would be hard to find an investment that would earn you more than that without some risk involved. Nowadays with the low rates, I agree with JackFlash that you have to be the judge of whether it's worth it.
posted by treehorn+bunny at 5:28 PM on May 27, 2013

Seconding muddgirl - I have one because I want to keep a certain amount of my money very very liquid and easily accessible (for emergencies and such), and that amount is more than I need to keep in my checking account to cover typical bills. For something like that, 0.85% is better than the (essentially) nothing I would get if I had placed it in my checking account, so hey, why not.

But if you're hoping that the interest you make off of it will be a significant contributor towards those Invisalign braces you're hoping for, I think you're going to be waiting a long, long time.
posted by Flunkie at 6:19 PM on May 27, 2013

From the interest perspective, as everybody else has pointed out, there's not a huge amount of cash to be had. I think they are worth it, especially for saving for specific goals, because they separate money you're saving for some future use from the money floating around in your bank account. Out of sight, out of mind and all that. ING (for me at least) has the ability for you to produce several (kind of virtual) accounts once you've got an account set up with them; so I have specific accounts dedicated for everything from an emergency fund to my rent payment to travel.
posted by Homeboy Trouble at 7:06 PM on May 27, 2013

Best answer: I think this is best to think of not in terms of being any kind of investment, but as a bit of a salve against the opportunity cost of needing to have some liquid assets available.
posted by dhartung at 2:36 AM on May 28, 2013 [1 favorite]

Because of the criminally paltry interest rates, you should look at any savings account as a way to keep a block of money liquid for emergencies or unexpected expenses. Any interest you accrue is secondary in the calculation. Ease of access to the money is primary goal.
posted by Thorzdad at 5:49 AM on May 28, 2013

Response by poster: Thanks, everyone! Still on the fence, but this is good information. :)
posted by Anima Mundi at 10:02 AM on May 29, 2013

I just checked, and like alligatorman, my credit union checking account offers 2.27% APY.
posted by jaksemas at 10:37 AM on May 29, 2013