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The benefits of switching to a high-yield savings account

High-yield savings accounts are just like traditional savings accounts except they offer much better rates of return.

MINNEAPOLIS — You may have noticed your bank or financial institution deposits money or interest into your savings account monthly.

Let's just say it's a small "thank you" for deciding to hold your money in their bank. The average payout is only about 0.3%.

"Most banks have been very stingy with their payouts. And even when they increase rates, they've done so in very small increments," said Greg McBride, Chief Financial Analyst at Bankrate

Experts say if you had a high-yield savings account, you'd be better off.

"High-yield savings accounts are just like a traditional savings account except they pay much better rates of return," said McBride.

When he says better, he means it. You could be earning more than 4%. That's a great deal! So why don't more Americans have one?

Experts say some people don't have a high-yield savings account because they think they need to put a lot of money down. But that's not true. You can open some online accounts with a very low or modest minimum deposit.

So where can you sign up?

"You're not going to find this at the bank down the street," said McBride. "Online banks, credit unions, or community banks, many times in other parts of the country, are those that are offering these. But many of these are available nationwide, so this is something that literally everybody can take advantage of."

The transition to the high-yield savings life is an easy one.

"You don't have to move all of your bank accounts. You set up this online savings account, and then you link it to the checking account you have at your current bank or credit union," said McBride.

You can tap into your high-yield savings account whenever you need the money, but you can't pull money out every day like you would a checking account. You're limited to six total withdrawals per month.

"The best time to start is now. Never too early, never too late either," said McBride.

McBride says it can take 48 hours to move the money from your high-yield savings account into your checking account.

Here is a link to the highest yielding, nationally available, federally insured online savings accounts out there, according to Bankrate. 

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