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A Closer Look at High-Yield Account Options

May 29, 2020 | 5 minute read

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With the current economic environment, every penny means more. One way to earn more on your hard-earned money is through a high-yield account. But what is a high-yield account? And how does it differ from other accounts at a credit union or bank?

Ways a High-Yield Account Works in Your Favor

In times of market volatility, a high-yield account, such as a certificate or high-yield checking account, offers more stability. Even though interest rates can change, you’ll often find higher earning potential compared with traditional savings or checking accounts that don’t earn much interest at all. In fact, the average savings account only earns 0.01% annual percentage yield (APY).*

Here’s why the difference in interest matters: Let’s say you have $10,000 sitting in a traditional savings account for one year earning the average 0.01% APY*; you’d earn $1 in interest for an entire year. Now let’s say you put that $10,000 in a high-yield account with an interest rate of 1.00% APY. You’re now looking at a return of up to $100! A high-yield account can be a great option when you want to grow your savings faster, especially with the power of compound interest allowing you to make money on the interest you earned.

Want to give your savings an even bigger boost? If you leave your savings untouched for a period of years or even decades, it can add up to a large sum of money because of compound interest. So be sure to put your money aside and avoid touching it. And if possible, set up automatic deposits so money is pulled on a recurring basis from one account right into your high-yield account – you won’t even need to think about it.

Choosing the Right High-Interest Account

Before you decide on a high-yield account, it’s important to consider several factors.

  • APY. As one of the most important factors, the APY determines the amount of interest you can earn in a given year. The higher the percentage, the better!
  • Tiers. If you choose an account that offers tiers, you can earn different interest rates depending on how much is in the account. This can be a great incentive to save more and reach the next tier. It doesn’t hurt to start small, so start saving with whatever feels comfortable.
  • Insured by the NCUA or FDIC. Credit Unions are insured by the National Credit Union Administration (NCUA) and banks are insured by the Federal Deposit Insurance Corporation (FDIC). This affirms your money is protected by the U.S. government.
  • Account management. Online and mobile banking services make it easy to deposit funds into your account so you can continue to grow your savings.

High-Yield Account Options at GECU. Which One Is Right for You?

  • A Certificate can help you save for both short- and long-term goals due to higher rates and a variety of terms. You have flexibility with the deposit amount and the length of the term, so you’ll know exactly what you’ll earn from the start, assuming you don’t withdraw your funds before the maturity date. Plus, at GECU, you can open with as little as $500.
  • A Thrive Money Market Account is a high-yield savings account and also great for both short- and long-term savings goals. It too offers a higher return, but unlike a certificate, you have more accessibility to your money when you need it, whether you want to withdraw money or make a deposit. Plus, the account comes with savings tiers, so as your balance increases, so will your return. There is no minimum to open the account, so you can save whatever amount you feel comfortable. As this is a savings account, you are limited to making up to six (6) transfers each month from the account via Online or Mobile Banking transfers, overdraft protection transfers, wire transfers, and more under Regulation D.
  • An IRA Money Market Account can help you put your retirement goals within reach. An IRA Money Market (aka IRA high-yield savings) retains the tax advantages specifically designed for retirement savings and is available as a Traditional or Roth plan. But the real benefit is the stability and liquidity of a money market, making it easier to use funds in the account once you reach retirement age.
  • Our Amplified High-Yield Checking allows you to start earning interest at $1,500 and since it’s a checking account, there are no withdrawal limitations like there are with savings accounts. Although this is a checking account, it’s a great way to grow your savings at the same time. In addition to the higher-yields, you’ll also have access to automatic savings features like our Round-Up savings program and Purchase Rewards.

During these unprecedented times, it’s important to grow funds safely and securely. And if you can grow them faster, thus allowing you to achieve your savings goals quicker, even better! High-yield accounts can be that solution. When choosing the best option for you, make sure to review your options, goals, as well as the pros and cons of each account before you decide.

If a Certificate, Thrive Money Market, or an Amplified High-Yield checking account sound like the right choice for your savings needs, you can easily open your account online. For an IRA Money Market Account, you will need to schedule an appointment at a local branch.

 

 

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* Value Penguin Average Savings Account Interest Rates for 2019: Compared Across Banks