Where to park money? Three high-yield savings accounts worth exploring

Summary

  • High yielding saving accounts are those that offer higher interest rates on saving deposits.
  • These banks are mostly online banks. They have fewer overheads and can pass on earnings in terms of interest to their customers.
  • These are easy to open accounts to keep money that depositors may want to use at any time.  

All savings accounts pay an interest rate for the money kept in the account. The more is the interest rate, the higher is the growth of your savings. Many online banks offer higher rates than the brick-and-mortar banks like Wells Fargo, JP Morgan Chase, and Bank of America. 

                         

Where to park money? Three high yield savings accounts worth exploring

 

The brick-and-mortar banks have branches with overhead costs like rent and staff salary, etc. Banks adjust these expenses from their earnings. In the case of online banks, these overheads are either less or do not exist. As such, online banks may pass on the higher income to the savings account holders through interest and yield. Many banks pay an annual percentage yield (APY) of 0.01%. The average APY is 0.06% as per Federal Deposit Insurance Corp. (FDIC).  

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This 0.01% or a 0.06% interest rate difference could make a huge difference in the long term. Opening an account with an online bank is easy. Banks are safe when insured by FDIC, and credit unions are safe when insured by National Credit Union Administration up to a minimum of US$250,000.

Here we discuss three banks that offer higher yields on the money parked in the savings account.

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Marcus by Goldman Sachs 

Marcus is a brand of Goldman Sachs USA. It offers fixed-rate personal loans, home improvement loans, CDs, and high yield savings accounts without a fee. In addition, Marcus offers an annual percentage yield (APY) of 0.50% and requires only US$ 0.01 as a minimum balance.

Being a part of Goldman Sachs and FDIC member, Marcus can be a safe option to park your money. Marcus by Goldman Sachs is an online bank and does not have branches or ATMs. 

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Ally Bank

Ally Bank is Ally Financial Inc.'s (NYSE: ALLY) subsidiary company. Ally Bank is an online bank and has no branch. The bank offers a savings account, CDs, checking accounts, credit cards, auto loans, mortgages, and investment products. Ally bank APY is 0.50%, and the minimum balance requirement is only US$ 0.01.

This FDIC member reported a US$ 129 billion retail deposit balance in the second quarter of 2021 results. In addition, its customers increased from 324 thousand in 2010 to 2.39 million in Q2 2021.

The holding company Ally Financial Inc. is also engaged in automotive finance, Insurance, corporate finance, and mortgage finance.

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Synchrony Financial

Synchrony Financial is a consumer finance company behind Synchrony Bank. Synchrony bank is another online bank that offers an APY of 0.50% with almost zero minimum balance requirement of US$ 0.01.

It is a member of FDIC and offers savings accounts, CDs, individual retirement accounts, credit cards and money market accounts. 

Please note: The above constitutes a preliminary view and any interest in stocks/cryptocurrencies should be evaluated further from an investment point of view.

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