High-yield savings accounts are deposit accounts available through online or brick-and-mortar banks that earn a higher interest rate than a traditional savings account, letting you save more over time.
Why Choose a High-Yield Savings Account
If you want to start saving for college, opening a high-yield savings account dedicated to your child’s education is a good start. A high-yield savings account with a competitive Annual Percentage Yield (APY) can be a low-risk and flexible way to save for college. You can contribute as much as you like, as often as you like. While the end goal might be college savings, you also have the option to use the money for anything, anytime.
How High-Yield Savings Accounts Work
When you deposit your money in a high-yield savings account, your bank will pay you a certain amount of interest, based on the account’s interest rate and how much money you’ve deposited.
The interest rate offered on a high-yield savings account is generally higher than the interest rate offered on a traditional savings account, meaning you can earn more interest over time and your savings grow more quickly. Traditional savings accounts offer about a .01% interest rate. If you have a $10,000 balance and maintain that over the course of a year, you'd earn $1 in interest. In a High-Yield Savings Account, like Upromise GoalSaver, which is paying 0.85% APY, you'd earn $85 in interest.1
What to Look for in a High-Yield Savings Account
When it comes time to choose your high-yield savings account, there are some things you should consider.
- Make sure you check for any fees or restrictions associated with the account.
- Be sure to compare interest rates being offered.
- Find out what, if any, restrictions there are around withdrawals.
- See if there is a tiered interest rate which typically offers more earnings for maintaining a higher balance.
- Compare online banks and retail banks because online banks typically have fewer expenses and can pass those savings onto you through higher rates of interest. Make sure it is FDIC insured.
Upromise GoalSaver is a High-Yield Savings Account
Upromise GoalSaver is a free, no-fee online savings account that helps you visualize and track progress towards your savings goals. You can also earn milestone rewards and loyalty bonuses.2 Plus, if you’re a Upromise member, you can boost your savings with a 10% match on transferred Upromise earnings.3
Learn about planning for college, saving for college, growing your savings with Upromise, and more.