Higher Bank Yields

YIELDS ON SAVINGS accounts, money market deposit accounts and certificates of deposit are so modest that it’s tempting to opt for the convenience of the local bank, even if you know you could do better elsewhere. After all, is it really worth shopping around for an online savings account that pays perhaps 0.6%, rather than settling for 0.1% at the nearby bank you already use?

Let’s say you’ll keep $10,000 in the account. That extra 0.5 percentage point of interest would be worth $50 a year. If you saw $50 on the sidewalk, you’d probably bend over and pick it up. Finding higher-yielding savings accounts and CDs doesn’t involve that much more effort.

To find the best rates, spend some time scouring the internet or check out The banks that offer the best rates can vary from one month to the next, depending on which institutions are most aggressively seeking new customers. Still, the top yields can frequently be found at banks such as Ally Bank, Capital One, CIT Bank, Discover Bank, Marcus by Goldman SachsSynchrony Bank and TIAA Bank. Most of these banks can offer higher yields because they’re largely or entirely online, so they don’t have to pay the overhead incurred by traditional banks with their hundreds, and sometimes thousands, of brick-and-mortar branches.

Money market deposit accounts often pay slightly more interest than savings accounts, but may require a larger minimum balance. Both typically limit withdrawals to six per month. Certificates of deposit usually pay even more, but your money is locked up until the CD’s maturity date, unless you’re willing to pay the early withdrawal penalty. CDs, money market deposit accounts and savings accounts are all backed by the FDIC—unlike money market mutual funds, where there is a small risk that you could lose money.

Next: FDIC Insurance

Previous: Asset No. 3: Cash

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