In the age of high interest rates, you need to take advantage.
Banks offer you interest on your money in savings to entice you to keep your money with them. However, most savings accounts offer very low interest rates for having the privilege of holding your hard-earned money (and using it as they see fit. Like investing it for their own profits.) According to Bankrate, “The national average yield for savings accounts is 0.6% APY.” That’s really not much.
But just as easily as having such a low interest rate, you can put your money in a bank that gives you a significantly higher interest rate. So why not?
Quick definition: APY, which stands for Annual Percentage Yield, is a way to figure out how much money you can make from your savings or investments in a year, and it takes into account that you earn interest on both the money you originally put in and the interest you’ve already earned. It’s like your money growing a little bit faster because it makes money on the money it’s already made.
Just to demonstrate, if you have $10,000 in a standard Chase savings account which has a 0.01% APY then over one year you will be paid $100 for a total of $10,100. But if you kept the $10,000 in a high yield Capital One savings account, which has a 4.30% APY, then over one year you would earn $430 for a total of $10,430. After 10 years, the Capital One account would have $15,654.66, while the Chase account would have $11,046.14.
And that’s for the same money that’s literally just sitting.
After 20 years, the Chase account would have $12,176.86 dollars in it, while the Capital One account would have $24,735.23. Now that’s over double!
Opening a high yield savings account is easy. You can open a Capital One 360 Performance Savings Account with a 4.30% APY online here. (While there are online banks that offer higher APY rates, you’ll probably feel secure transferring your savings into a reputable bank.)
Don’t forget to close your old savings account if there’s fees associated with having a low balance. And for those who wonder if you can trust any bank, as long as they’re FDIC insured, the government is insuring your money. So don’t worry.
There’s no minimum to open a 360 Performance account and there’s no fees for maintenance. Win-win all around!
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