Why Even Dirtbags Need High-Yield Savings Accounts

I’ve never met anyone—be it someone making $25,000 a year or $250,000—who has said, “You know what? I think I have too much money saved.” Obviously, having a robust savings account is a smart money decision, yet 57 percent of Americans say they have less than $1,000 in their bank accounts, according to a 2017 survey. Here’s how to boost your savings—no matter your income level.

Why We All Need Savings

A few years ago, I had “the year,” a period when everything went wrong. I went through a tough, expensive divorce, I moved out of my house and rented an apartment, I bought all new furniture, my car needed four new tires…. And as a result of all this, I took on bone-crushing debt.

I’ve worked for 12 years now as a financial planner, and I know that at some point or another, we all get hit with big unexpected expenses, everything from a rock-climbing injury to car trouble. A solid savings plan will help you prepare for these eventualities—or, you know, take that three-week international vacation you’ve been dreaming about.

Simply put, savings buys you options.

What Is a High-Yield Savings Account?

High-yield savings accounts are as popular right now as avocado toast. They offer a cozy place to store your money, be it for emergencies or travel. The differences between a high-yield account and a regular bank account are pretty simple:

• Bank savings accounts pay low interest (usually 0.01 to 0.03 percent, depending on the bank) and often charge monthly fees.
• High-yield savings accounts pay higher interest (usually 0.75 to 1.5 percent, depending on the bank) and almost never charge monthly fees.

I’m a big fan of earning as much as I can for my money as is ethically possible. If someone is going to drop an extra $20 in my account just for using a different savings account, I’m going to take it. 

What Are My Options?

There are tons of options for a high-yield savings account. When it comes to choosing one, you should look at a couple of factors and decide which make sense to prioritize. Here are five things to consider.  

• Minimum-balance requirements: Don’t choose one that makes you carry a minimum balance over $100. 
• Monthly maintenance fee: Don’t ever pick one that has a monthly fee. 
• Interest rate: Don’t choose one that offers you less than 1 percent interest. 
• ATM network: Does the bank offer a widespread one, and does that matter to you? 
• Transferring money: How will you do it, and what could be the potential delays?

You can research lots of options on sites like NerdWallet and Bankrate; however, some of my personal favorites are:

Marcus by Goldman Sachs

Marcus pays an industry-leading 2.05 percent on savings, with zero fees. The downsides: it doesn’t offer an ATM network, and you must have another external bank account to transfer money.

• Minimum balance: $1 to earn the interest rate
• Monthly maintenance fee: $0
• Interest rate: 2.05 percent APY (annual percentage yield)
• ATM network: No network currently
• Transferring money: Six withdrawals or transfers in per month from your account

American Express Personal Savings

Amex pays 1.9 percent on savings and also has no fees or minimum-balance requirements. It doesn’t provide an ATM card, so you must transfer money electronically.

• Minimum balance: $0
• Monthly maintenance fee: $0
• Interest rate: 1.9 percent APY
• ATM network: No network currently
• Transferring money: Six withdrawals or transfers in per month from your account

Ally Bank

Ally is the OG when it comes to high-yield savings accounts. Ally pays 1.9 percent on savings and also offers no fees or minimum deposit amounts. It also has a great website and an app that’s easy to use.  

• Minimum-balance: $0
• Monthly maintenance fee: $0
• Interest rate: 1.9 percent APY
• ATM network: No network currently but you can deposit checks with Ally eCheck Deposit or ACH transfers. 
• Transferring money: Six withdrawals or transfers in a month from your account

Discover Bank

Discover also pays 1.9 percent and is gaining traction in the marketplace. There are no monthly fees, and you can easily transfer funds to an external bank account to access your cash.

• Minimum balance: $0
• Monthly maintenance fee: $0
• Interest rate: 1.9 percent APY
• ATM network: No network currently, but you can deposit a check with Discover’s Mobile Check Deposit or through Direct Deposit
• Transferring money: Six withdrawals or transfers in per month from your account