Choosing a High Interest Savings Account


The economy is floundering, but the good thing is that people are becoming wise with their money. We are in an age of thrift, simple living, and saving. Are you looking to open a high interest savings account to make the most of your money? That is a very wise move and here is how to do so properly.

First, you need to find an account with a high interest rate. You can check or for a list of the most popular high interest savings accounts in order of their annual percentage yield (APY, the interest rate you will earn on your money). However, you need to also compare the fine print, not just the interest rate.

What to check for in the fine print:

Minimum Deposit: If you do not have that much money then you can’t open that account. Some accounts require “no minimum deposit” so you can open an account with as little as $1.

Minimum Balance: If you do not have this much money you cannot open this account. If you do not plan to keep this amount of money in this account at all times, this account will end up costing you money in additional fees. Alternatively, you can look for an account that requires “no minimums” meaning you can keep as little or as much in your savings account as you like without incurring penalties.

Fees: Check for anything that says “fee” especially if it says “maintenance fee.” A maintenance fee is a monthly charge that you pay just to have your savings account. It’s a waste of money. Look for a savings account that doesn’t have a maintenance or monthly fee. However, fees for overdrawing or similar negligent actions on your part are to be expected. Just follow the rules and you won’t incur those types of fees.

Interest Rate Stipulations: Sometimes the advertised interest rate is only applicable if you keep a set amount of money in that account, and it’s usually a very large amount of money. Other times it’s a promotional or introductory rate that changes after a set amount of time, such as six months or a year. Read the fine print and you’ll find the truth of their advertised interest rate.

Now what type of savings account to open? There are so many different forms including savings accounts, money market deposit accounts, certificate of deposits, and even interest accruing checking accounts. Let’s take a look at each.

Savings Account

A traditional savings account is a great way to put away your money and allow it to safely grow. However, interest rates are subject to change depending on the economy. With a savings account you can usually deposit and withdraw your money as often as you like without penalty (but check the fine print to be sure, as this rule varies by bank). Online only banks generally offer higher interest rates than traditional brick and mortar financial businesses. It costs them less to operate on an online basis and they pass their monetary advantages to their customers through higher interests rates. As long as the online bank is FDIC insured and has a good standing (check out the Better Business Bureau as well as online opinion websites such as to make sure they are a reputable company) then it’s a good option for a savings account.

Money Market Deposit Account

Also known as a Money Market Account (do not confuse with Money Market Fund which is an investment account, not a savings account), this account is essentially the same as a savings account (FDIC insured and variable interest rates). The main differences are that the bank uses the money in more aggressive investment options and this sometimes means a higher interest rate for the customer than they would have in a regular savings account. However, with online only banks savings accounts now in the competition, usually they have the highest interest rates. Furthermore, money market deposit accounts often have restrictions as to how often you can withdraw your money.

CD (Certificate of Deposit)

The difference between a CD and a savings account (or money market deposit account) is that you deposit money and agree to leave it there for a set amount of time. In return you receive a guaranteed interest rate that is typically higher than you’d get in a savings account. When your account matures you are allowed to withdraw the deposit sum of money plus interest, but until that time comes you have to leave that money there. An early withdraw is usually very costly with penalties. This is not a good savings option for money you may need quick access to such as an emergency fund.

Interest/Reward Checking Account

It’s like a savings account, but it has the accessibility of a checking account. You keep your money in your checking account and earn interest, but you can write checks and use your debit card too. However, you need to check the fine print. Many of these accounts require a large minimum balance, maintenance fees, additional penalty fees, and often that advertised high percentage yield is just an introductory rate. Be extra careful to read the fine print before signing up for this type of account.

Whichever high interest savings account you decide to get, do check out the bank thoroughly. Always make sure your bank is FDIC insured (Federal Deposit Insurance Corporation is the bank’s insurance that guarantees you will get the money you deposit back in full when you withdraw, which was nationally instated after the depression in the 30’s; currently the FDIC covers $250,000 per account). With the economic crisis, some banks are losing their FDIC backing so double check that your bank is still in good standing. Also, be leery of lesser known banks as many are shutting down. As long as they have FDIC coverage, even if the bank were to close or be bought out by another company, your money will be safe and returned to you in full. However, the nuisance of changing accounts, or the terms of the account changing under new ownership, is reason enough to stick with well established financial institutions. This includes online only banks as well as traditional brick and mortar banks, as long as they have a good history.

If you’re not satisfied with saving and you’re familiar with stock trading, you can start with this kind of investments. Here’s a stock market calculator that can guide you initially.

Now you are equipped with the necessary knowledge to choose the best high interest savings account. Good luck and congratulations on making the smart move to save your money!

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