5 myths about high-yield savings accounts

5 Myths About High-Yield Savings Accounts During COVID-19

5 myths about high-yield savings accounts

Last year’s savings rates of 2% and higher have come and gone, but that doesn’t mean high-yield savings accounts disappeared.

“There are high-yield savings accounts out there, but it’s all relative,” says Mike Schenk, chief economist for the Credit Union National Association.

When the Federal Reserve cut its benchmark rate to nearly zero in March, many banks and credit unions took their cue to lower rates on savings accounts. This affected online high-yield accounts more drastically than others. And it’s unclear when to expect rates to rise as the monthslong pandemic and related economic uncertainty continue.

If you’re thinking about getting a high-yield savings account or ditching the one you have, don’t fall for these misconceptions.

Myth 1: A high-yield savings account has the same rate over time

Not true, which can be good and bad. Savings accounts have variable rates that are subject to change, so an account you opened last week might not have the same rate this week. This means rising rates can benefit you without you doing anything. But on the flip side, rate drops can occur and, as in recent months, even become common.

From March to September 2020, the average rate across 15 online banks’ high-yield savings accounts dropped from 1.70% to 0.90% annual percentage yield, a NerdWallet analysis.

Despite this, having a high-yield and typically online-based savings account still blows traditional options the water. Their rates remain far above the national average of 0.05% for savings accounts. And if you already have a high-yield account and you’re itching to switch for a higher rate, maybe reconsider. Rates may keep dropping.

» Ready to compare? See the best high-yield savings accounts

Myth 2: The most important aspect of a high-yield savings account is the rate

Not exactly. The rate has big appeal, but a high-yield account’s safety, lack of fees and easy access to funds shouldn’t be overlooked.

other savings options, high-yield accounts are federally insured up to the standard limit of $250,000. This ensures that a bank failure won’t rob you of your money. You can double-check that an account is insured by finding the bank on the Federal Deposit Insurance Corp.’s BankFind tool.

Some online banking firms Chime and Simple have a partner bank to provide their FDIC insurance;check the fine print at the bottom of the website’s pages for details.

Credit unions receive equivalent insurance through the National Credit Union Administration, which you can look up on NCUA’s Research a Credit Union tool.

Most high-yield savings accounts don’t have monthly fees, which can save you money. Quick access to funds is also crucial, especially if you need cash on short notice during a crisis the current pandemic.

Myth 3: Your money is harder to access in an online savings account

That’s not true in most cases. traditional savings accounts, high-yield options provide ways to transfer money online to and from accounts you own at other banks. Generally, it takes a few weekdays for banks to process transfers, but some online banks also offer faster ways to access funds, such as ATM withdrawals and wire transfers.

Since online banks tend to be where the high-yield savings accounts are, chances are you’ll lose branch access in order to gain a top rate. But how often do you visit a branch, especially this year?

» Learn more about wire transfers by bank

Myth 4: All savings accounts make your money accessible at the same speed

Nope, and this may matter. How long a bank takes to process transactions can be the reason you’re waiting for money longer than expected. Every bank has a funds availability policy that states how long it takes to settle transactions: for example, processing cash and government checks the day after a bank receives them.

But banks can make exceptions. Funds can take longer to become available, such as seven days, especially for accounts opened within the previous 30 days and for check deposits over $5,000.

Switching banks may also carry an adjustment period with some processing delays.

But if your bank processes transactions more slowly than others, it can be a real problem if you expect to need your money soon after depositing it.

“Ask your regular bank how long they hold funds,” says Dana Twight, certified financial planner and owner of the Seattle area-based firm Twight Financial. “I just had a call with my credit union where they were withholding an ATM deposit for three days because it came from another credit union.”

Myth 5: The main purpose of a high-yield savings account is to earn interest

It’s tempting to think so, but no. Contributing money to a savings account consistently and over time will ly raise your balance a lot more than interest payments will. And a savings account is the ideal place to grow your money with an eye toward goals, such as saving for a down payment on a house or building an emergency fund of three to six months of living expenses.

» Learn more about how emergency funds work

“No dollar amount is too small” to save, Twight says. Once “you have an emergency fund, you have increased your ability to make choices when hard times come.”

Your account rate may waver, but your approach toward saving matters more.

John Thompson, chief program officer at the national nonprofit Financial Health Network, says, “To save with a plan … is one of the most critical behaviors for improving and sustaining financial health.”

Источник: https://www.nerdwallet.com/article/banking/myths-about-savings-accounts

Myths vs. facts about savings account interest rates

5 myths about high-yield savings accounts

Sometimes our ideas about money can keep us from managing it well. Rather than being paralyzed by false beliefs, seek out the facts about how to grow your money.
 

Myth: I’ll never grow my money leaving it in a bank account

Fact: Before thinking it’s pointless to keep money in the bank, brush up on the principle of compound interest. This is when you earn interest on the money you’ve saved, as well as on the interest it has earned.

For example, if you deposit $1,000 earning a 2 percent annual percentage yield, after a month you’d earn $1.67. Then your $1,001.67 begins to earn interest.

If you leave the money alone for 10 years, not adding to the principal amount, you would end up with $1,221 if you compounded the interest monthly.

Continue to add to the original investment and it increases the amount of money earning interest, meaning your money grows faster. 

True, many savings accounts offer less than 2 percent interest at the moment. But alternative accounts, such as certificates of deposit (CDs) and money market accounts, may provide higher interest rates and greater rewards than regular passport savings accounts. Before you explore those options, note: account access is limited and withdrawals may be subject to penalties.
 

Myth: But interest rates are still so low at banks

Fact: Keep an eye on the Federal Reserve’s benchmark interest rate. Why? Because the Fed rates influence the interest rate your bank will deliver on your savings account. Check your account, or ask at your bank if your rate is going up; it can take some time for a Fed action to show up in what banks do.

And remember: In addition to interest rates, it’s important to also look at different features and benefits that various accounts offer, as well as fees and minimum account balances, to determine what account is best suited for you.
 

Myth: I’m too young to save; I don’t earn enough

Fact: The earlier you stash away funds in a savings account, the more money you can accrue through compound interest. Many tried and true tricks can help increase your savings.

Think of the old “one bean on the pile each day” adage – very soon, you have a hill. For example, don’t spend any coins you receive as change.

At the end of the week, no matter how small the amount of change, deposit it into your savings account.

It’s a myth that young people can’t save; don’t feel pressure to do it all at once. Making a consistent effort will ultimately get you farther on the path to security.
 

Myth: It doesn’t matter if I save; I’ll never feel secure

Fact: In September 2017, the Consumer Finance Protection Bureau3 issued a report on financial well-being a survey of a wide range of income earners.

It showed that people who have liquid savings (money they can easily access) feel more secure than those who don’t. As the amount of savings increases, so do feelings of financial well-being.

The survey also showed that people feel much more secure if they can come up with cash to cover unexpected expenses.

So, having a strategy of saving over time – and having access to funds that let you absorb unanticipated expenses – leads to a sense of financial well-being. The most important thing is to start saving, even if the initial amount is small. Add to your savings regularly, and try not to touch the money you’ve set aside; let it earn interest for you.
 

Myth: Only rich people need advice on savings

Fact: Another government report from October 20162, shows that having higher financial knowledge and skills leads to better financial behaviors, which in turn leads to a better overall financial picture. So, if you don’t have enough money now, start studying and asking questions to improve your financial behavior. Seeking advice from a banker or financial coach can actually lead you to become wealthier. 
 

Myth: Banks are risky; I’m better off stashing my cash in my mattress

Fact: Banks are one of the safest places for your money. Be sure your bank is FDIC-insured, and up to $250,000 of your deposits across all your accounts will be insured; that’s a quarter of a million dollars per person.

Your money is insured through the government. The FDIC was created by Congress to boost confidence in the U.S. financial system.

Putting your money in the bank may better protect it than leaving it in your house or even investing in the stock market which can be more volatile.

Ready to open a U.S. Bank savings account? Explore your options.
 

2“Financial coaching: A strategy to improve financial well-being.” Consumer Federal Protection Bureau. 2016. 

Источник: https://www.usbank.com/financialiq/manage-your-household/personal-finance/myths-vs-facts-about-savings-account-interest-rates.html

6 Myths About Kasasa Checking Accounts

5 myths about high-yield savings accounts

It’s great that everybody is talking about Kasasa checking. But just every game of telephone, when people talk information gets distorted. It’s okay —  Kasasa checking accounts can be confusing when you're so used to the unnecessary banking fees, and questionable personal service you've received from big banks in the past.

We’ve rounded up a few common myths and misconceptions about Kasasa so we can clear up a few things.

Feel free to pass this information along and do a little myth-busting of your own. If you see anyone who is confused about how Kasasa accounts work, share this post with them.

Myth 1 – Kasasa accounts are not FDIC / NCUA insured


Kasasa partners with financial institutions — both credit unions and community banks — and all of them are insured by either the FDIC, NCUA, or ASI. Deposits at community banks are FDIC insured up to $250,000.

Deposits at credit unions are also insured up to $250,000 by either the NCUA or ASI.

When you open a Kasasa account, you can sleep tight knowing your financial institution has the proper protections in place to safeguard your money.

Myth 2 – You can get Kasasa accounts at any financial institution


Kasasa checking and savings accounts are exclusively available at community banks and credit unions for two reasons. First, because community banks and credit unions are known for their personal service. Secondly, because community banks and credit unions are vital to the well-being of local economies and the U.S.

See why your money is better off at a community bank or credit union.

Myth 3 – Kasasa is one account that does a lot of things


Kasasa offers four distinct accounts designed to give you what you want. All accounts are free, have no minimum balance requirements, offer nationwide ATM fee refunds, and free online banking.*

You can choose the account with the rewards that are right for you:

  • Kasasa Cash®: you earn a high interest rate paid in cash, every month you qualify.
  • Kasasa Cash Back®: no category restrictions gas or groceries, you earn cash back on everyday debit card purchases every month.
  • Kasasa Tunes®: perfect for online shoppers, music lovers, and app gamers, you earn monthly iTunes® and Amazon® refunds.
  • Kasasa Saver®: a free account that is linked to your Kasasa Cash or Kasasa Cash Back account. Every month, the ATM fee refunds and the interest you earn in your Kasasa Cash or Kasasa Cash Back account are automatically transferred to this account. In addition, the balance in your Kasasa Saver account also earns a high rate of interest.

See how Kasasa accounts are able to offer such awesome rewards in this blog post.

Myth 4 – Kasasa Cash and Kasasa Saver are a combined rate


Kasasa Cash and Kasasa Saver are two separate accounts that earn different interest rates. You will earn one interest rate on the balance in your Kasasa Cash account, for example 3.00% APY, along with ATM fee refunds.

* Every month that you qualify for the interest and ATM fee refunds in your Kasasa Cash account, you will then earn a high interest rate on the balance in your Kasasa Saver account, for example 1.50% APY. If you don’t qualify one month, both accounts are still free and each earn a base rate.

This works the same way when you pair Kasasa Saver with a Kasasa Cash Back account.

Myth 5 – All account qualifications are the same or a single account

Kasasa Cash, Kasasa Cash Back, and Kasasa Tunes may all have different monthly qualifications depending on the financial institution you bank with. Only the Kasasa Saver account benefits are rewarded when you meet the monthly qualifications for your paired Kasasa Cash or Kasasa Cash Back account.

Myth 6 – You must start an application to see the rates


You do not have to start an application to view rates. To see what banks and credit unions near you offer Kasasa, search “Kasasa” plus your city name in your favorite search engine.

 On the results page, select one of the Kasasa providers near you — you’ll be able to view all the account details on their website.

You will have the opportunity to view rates, benefits, and qualifications, and then you can select the account that is right for you before beginning the application process.

Want to know more? Explore what a Kasasa checking account can do for you today!

*Qualifications, limits, and other requirements apply to earn rewards on Kasasa accounts. See your chosen financial institution for details.

Источник: https://www.kasasa.com/blog/products/kasasa-myth-busting

Don’t believe these myths about high-yield savings accounts during COVID-19

5 myths about high-yield savings accounts

Last year’s savings rates of 2% and higher have come and gone, but that doesn’t mean high-yield savings accounts disappeared.

“There are high-yield savings accounts out there, but it’s all relative,” says Mike Schenk, chief economist for the Credit Union National Association.

When the Federal Reserve cut its benchmark rate to nearly zero in March, many banks and credit unions took their cue to lower rates on savings accounts. This affected online high-yield accounts more drastically than others. And it’s unclear when to expect rates to rise as the monthslong pandemic and related economic uncertainty continue.

If you’re thinking about getting a high-yield savings account or ditching the one you have, don’t fall for these misconceptions.

More from NerdWallet:

  • ‘When Can I Shred This Check?’ and Other Online Banking FAQ
  • How to Be Reunited With Your Long-Lost Money
  • How to Get Started If You’ve Never Had a Bank Account

Источник: https://www.marketwatch.com/story/dont-believe-these-myths-about-high-yield-savings-accounts-during-covid-19-2020-10-16

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