Looking to save money in high-yield savings account with larger banks? Let me give you 2 recommendations that you can feel good about parking your money in the bank in the midst of banking crisis after the fall of Silicon Valley Bank in 2023.
When we say large American banks, we think of JP Morgan Chase, Wellsfargo, Bank of America. While these brick and mortar banks provide local branches for customers to withdraw their money, their savings interest rate is near zero at 0.01% APY. It’s sad to be saving your hard-earned money with these banks earning no interests while the inflation rate in America is at around 6%.
I know there are many high-yield savings offer right now with the Federal Reserve kept increasing the interest rate since 2022 but if you are like me wondering how safe are banks like Ally, CIT, Citizens, Marcus, then you will be hesitant to open accounts with them. To be honest, I get to know of these online banks only from financial websites that featured them and some of them as sponsored products. Rarely do I hear about them elsewhere.
So, upon my recent research, I found 2 of the reputable banks that surprisingly offer much higher interests rates.
1. American Express – High Yield Savings Account (3.90% APY)
Yes, agree, I don’t normally think of American Express as a bank for savings account because they are known as credit card company or payment provider. However, we all know that it is a financial services company with a long-standing reputation. It is one of the world’s most trusted and recognizable brand with a long history dated back 160+ years ago when it was founded.
[Update: Amex updated their HYSA interest rate from 3.75% to 3.90% as of May 16th, YAY!]
At 3.90% APY, the interest rate is compounded daily, posted monthly and is 10X higher than national average. Opening an account requires no minimum, no monthly fees. Just like any FDIC-insured bank, each depositor is insured to at least $250,000 per depositor, per insured bank, per ownership category.
To learn more, go to American Express High Yield Savings Account and apply online.
This post is NOT affiliated or sponsored, I just like helping people and sharing solution to a known problem.
2. Citibank – No Penalty CD (4.05% APY)
Okay, well, Citibank savings accounts still offer embarrassingly low interest rates. But, they do offer attractive interest rate on their No Penalty CD for a fixed 12-month term. As the account name implies, there is no withdrawal penalty if you need your money earlier than the maturity date. You can withdraw the full balance without withdrawal penalty beginning 7 days after account funding. Opening an account requires a minimum of $500 deposit but at 4.05% APY, it is one of the best rate offered by a leading global bank.
Since the account is a Certificate of Deposit, you earn a guaranteed interest rate during the CD term. You are able to withdraw the full balance without early withdrawal penalties (after the first 7 days) but not partial amount. So, if you think you are likely to need some of the money sooner, you may want to build a CD ladder. Saving your money in chunks across multiple No Penalty CD accounts instead of one lump sum in one account. That way, you can withdraw money just the amount you need in small chunk, leaving the rests in other accounts to collect fixed interests until their full maturity.
To learn more, go to Citi Certificate of Deposit, choose No Penalty CD.
[It looks like the No-Penalty CD rate is NO longer at 4.05% when I last checked on Apr 21, 2023. Sorry]
This post is NOT affiliated or sponsored, I just like helping people and sharing solution to a known problem.
Alternative: Wealthfront Cash Account (4.3% APY)
The fact is that there’s also another higher interest rate account that I am fully aware of, I will go ahead and share it here as well. Why not! And, it is Wealthfront Cash Account. They are one of the options that have been keeping up with the Fed’s rising interest rates in the last 2 years.
As of this writing, Wealthfront is currently offering:
- 4.55% APY (as of May 5th, 2023)
4.3% APY (as of March 30, 2023)
One thing to note is that Wealthfront is not a bank, it is a robo-advisors brokerage firm. They offer cash account service through their partner bank program, specifically with Green Dot Bank and many other participant banks. It is not clear to me how the money deposited is being distributed and held at their partner banks, and at this time, as a customer, we are not able to set preference at which bank we want our money be held. However, through these partner banks, your money are FDIC-insured. They provide up to $3Mil FDIC insurance through the partner banks.
If you are willing to take the risk of not knowing which exact bank your money is deposited into (as they are all FDIC-insured), then you can consider opening Wealthfront Cash account that currently offers the highest saving rate of 4.55% APY. Plus, you can receive additional 0.5% boost for 3 months through a referral link, if you sign up as a new user. And then you can refer your friends and family too for additional 3 months for each friend you invite.
There you have it, all the options for HYSA you may consider saving your money now as of May 2023.
Key Takeaways
Interest rate is at its all time high. For those who have money to save or invest, don’t overlook the difference in the interest rates among savings accounts. With power of compounding, a few percentage points matter and result in significant amount of money and potential for growing wealth. Always do your research, whether investing or saving, better choose services that you feel are going to be reliable long into foreseeable future.