The Savings Accounts That Beat The Stock Market

In 2018, high yield savings accounts outperformed the stock market for the first time in a decade. A savings account offers a safe place to set aside money for an upcoming trip, a big expense or a safety net in case of emergencies.

If you’re holding onto your money in a traditional savings account, you could earn 25 times the interest with a high yield savings account. Fiona’s search engine for savings accounts can help you explore available accounts and choose an offer that makes sense with your financial needs.

Maximize how much interest you accrue with a savings account that offers an annual percentage yield (APY) of 2% or more.

APY means the percent of the total account balance that you will accrue in interest over the course of the year. While most banks use compound interest, different financial institutions might compound interest monthly or annually (or even daily). With a higher APY, you can earn more interest and put away extra money to reach your financial goals.

Last year, the average APY across all savings accounts was .08%, according to the Federal Deposit Insurance Corp (FDIC). High yield savings accounts offer 25 times that. If you open an account with a $1,000 balance and deposit another $100 a month, your account will earn interest on the principal, the additions and the total interest. Over time it adds up. At the end of one year, you’d have $2,636.77 with a high yield savings account, compared to $2,215.90 with an average account.

2% or higher APY can help you combat inflation and maintain the value of your money.

Most traditional and online banks have rolled out mobile apps to give users access to their account information, where and when they need it. Especially for banks without a physical presence, intuitive and helpful apps are essential for a hassle-free banking experience. Savings accounts make it easy to liquidate your balance and make withdrawals if you need to make a purchase.

Credit unions and community banks often offer a personal touch, but they can limit your ability to access cash when you’re traveling outside of their range. Some online banks won’t cover fees if you use another provider’s ATM outside of their network.

Hidden fees can quickly negate the benefits of high yield savings accounts. Some online banks charge costly fees for incoming wires, automatic transfers or copies of your statement.

Compare different offers side by side to make sure your account will suit your needs. Do you need to start small with a lower balance? Look for accounts that don’t charge fees when they fall below a certain balance. Some banks advertise attractive APYs, but only for accounts over a certain balance threshold.

Banks are legally allowed to change their interest rates at any time — they’re not locked into the high APYs they might offer for new customers. Watch out for high introductory offers that bring in new customers and then shift to a lower APY closer to the national average.

There’s no one-size-fits-all formula for the perfect savings account. Use Fiona to search for and compare different offers, helping you find the best solution for your goals.