Discover a simple way for Americans to grow their wealth through a few clicks of a button, with zero risk involved. However, despite the higher interest rates, most middle-class Americans are unaware of this risk-free opportunity to earn billions of dollars in interest on their savings.
Recent research from Santander Bank reveals that since early 2022, 68% of middle-income Americans have neglected to move their deposits into high-yield savings accounts, even though inflation concerns are impacting their financial well-being.
A survey conducted by Bankrate in March 2023 found that only 22% of savers earn 3% or more on their accounts, despite the fact that 75% of online accounts offer higher rates. The average annual percentage yield on surveyed savings and money market deposit accounts is 3.33%.
Furthermore, the same survey reveals that 16% of savers do not earn any interest on their accounts.
Some savers are unaware of the potential earnings from opening a high-yield savings account. Others hesitate to make changes to their banking routines or believe opening a new account is time-consuming.
“An opportunity to get free money”
“When discussing high-yield accounts with clients, most people have not taken any action regarding their cash. The majority keep it in traditional bank accounts. However, it is advisable in this environment to utilize high-yield accounts,” suggests Jaime Eckels, a wealth manager at Plante Moran Financial Advisors. “There are minimal downsides to using them, so it makes sense to earn ten times what a traditional savings account offers.”
Other customers simply stick to their habits. “The average customer maintains the same checking or savings account for about 17 years,” notes Ted Rossman, senior industry analyst at Bankrate, speaking to CBS MoneyWatch.
However, it is worth spending about 10 minutes to open a high-yield savings account.
“It’s a smart automation strategy that can pay off in the long run. You make a good decision once, and it gets repeated every month as the interest rolls in,” he explains. Some banks offer savings accounts with an annual interest yield as high as 5%.
“It’s an opportunity to receive free money,” adds Rossman. Take someone with $10,000 in a savings account earning 5% interest annually. That person will earn an extra $500 within a year.
“That’s a considerable amount for a risk-free account that remains idle,” comments Rossman. In contrast, the same amount stashed in a big bank would only yield a small return. “You could be gaining hundreds of dollars each year by simply keeping your money in an online or neo bank,” says Lily Liu, financial expert and CEO of Pinata, a credit building program for renters.
Competing on rates
Online banks attract clients by offering attractive interest rates on savings accounts, rather than spending millions of dollars on advertising at sports stadiums like big banks do. Furthermore, since they operate online, they can keep costs low without maintaining extensive branch networks.
On the other hand, big banks offer savings accounts with extremely low yields. “You won’t earn any money with them,” remarks Adam Taggart, founder and CEO of Wealthion, a financial advisory.
Another alternative to high-yield savings accounts are money market funds, a type of mutual fund available from brokerages that can also provide savers with decent returns on their money.
“More people are realizing they can transfer cash from an account earning nothing at a commercial bank with insultingly low returns to a money market fund yielding 5.25% with just a few mouse clicks. There is no reason not to do it,” advises Taggart. “By putting your money into savings vehicles like this, you can take advantage of compound interest with low risk working in your favor.”
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
