When it comes to saving money, there are so many different ways to do it that it can make your head spin. Since it is a New Year, we wanted to take a look at how we were saving and see if we could reconfigure things to save us more. Enter our financial trainer with the brilliant idea to switch our savings to high yield savings accounts instead. So, how does this ultimately work out better for us and should you consider switching to a high yield savings account also?
What it is
Most savings accounts, through the brick and mortar banks, will get you somewhere between .25% – .75%. That is NOT very much savings at all, in my opinion.
We are with a Credit Union, so our savings rate was at the high end of that figure, but it still wasn’t really gaining us much ground. Whereas, right now the high yield savings accounts can range anywhere from 2.00% – 2.45%. That is a pretty big difference!
There are quite a few choices to weed through, when looking at high yield savings accounts. Some of them require a minimum balance, but others do not.
When we were looking, we leaned more towards the side of no minimum balance and the highest percentage we could get. Please keep in mind that these rates change regularly, so what we got may not be what you see now.
Either way, it doesn’t take too much time to go through the options and figure out which ones may work best for your own personal wants and needs.
is it difficult to switch
The biggest thing that stopped us from doing this before was time. Or lack thereof, to be more specific. We figured this would take a lot of time to weed through and actually implement. And if you are anything like us, time is not something we happen to have a plethora of these days. So we didn’t want to spend it trying to figure this out and move our money around.
But in all reality, once our financial trainer told us how much more we could save, it seemed silly to let that stop us.
So we sat down after our budget meeting one Sunday and looked at our high yield savings options. Once we chose the best fit for us, or so we hope, it didn’t take long to set up a new account.
We actually set up two accounts, because we wanted to switch to saving in buckets instead of just one account for everything. Now we have an emergency savings account and a travel fund. Traveling is what we really love to do, when we have the time, so it made sense to create a separate account just for that.
We did run across a slight issue when setting up the accounts originally, though. Since we don’t actually have any joint accounts, we found that we weren’t able to set up a joint high yield savings account.
Although, that information was not divulged to us until after we had gone through the whole process and set it up as a joint account. When it came time to add the funding account, it only let us add one checking account and we both had to be named on it.
It would have been nice to have that information at the very beginning of the process, instead of at the end. Due to this issue, we had to start the process all over again and set them up as individual accounts, instead of joint accounts.
It still works, because we needed two different high yield savings accounts anyway. But it means that each of us can only fund one of the accounts, which is not exactly ideal.
high yield savings increased our savings
Even with that little hiccup, we are pretty happy with who we decided to go with. We ultimately chose to go with My Savings Direct, because they had a 2.40% annual percentage yield.
Since our money was only getting us .75% before we moved over, we have now increased the interest we make by 220%!
That is a pretty huge jump and we are thrilled with it!
We kept our Credit Union savings accounts open with the minimum $25.00 though, because our bank requires that. But we moved everything else over to the high yield savings accounts at the end of last month. So far, we already have enough in our travel fund for a weekend getaway, if we want to take a break.
This is really exciting for us and we can’t wait to see how much more we will be able to save this year, just by making this one small change.