The annual inflation rate in the United States is increasingly climbing since the last decade. According to World Economic Forum research, it went from 3.2% in 2011 to 8.3% in 2022. What this means is any savings in a traditional bank that pays the FDIC national average 0.46% interest rate on savings account, will not beat inflation. You need a high paying interest savings account to beat this inflation rate.
Here is why.
Money saved in savings account from 2011 to 2022, actually lost 5.1% of its purchasing value. This is bad for any working class adult, since it defeats the goal of savings. I was contemplating on this issue, when I wrote where to put your savings to beat inflation in the United States. Financial products like high yield savings account amongst others can help you beat inflation.
Today, I am going to tell you about savings accounts with high interest rates. Usually, your traditional brick and mortar banks will only offer the FDIC national interest rate of 0.46% annually on their savings accounts. But nowadays, new online banks have sprung to offer highly competitive interest rates on their savings accounts. And, these pay 10 to 15 times of what your bank offers.
What Is A High Interest Savings Account?
Firstly, I need to explain what a high interest savings account is to you. A high yield interest account is a type of savings account that offers interest way above what traditional banks offer. Usually, the interest yield on the savings account is 10x the national average interest rate of 0.46% offered by brick and mortar banks.
This is an account you want to use to save money. This is because its interest rates are either 4% or above given the tier of savings account you want. You can read What Are High Yield Savings Accounts article to learn more about these types of savings accounts.
Highest Interest Yielding Savings Accounts
Here are the online banks with high yield savings accounts.
1. SoFi
SoFi is a good place for savings. Compared to your brick and mortar traditional bank, it has an FDIC-insured online savings account with high yield savings rate. SoFi offers a whooping 4.60% APY on its savings account.
Earlier, I mentioned the FDIC national interest rate on savings for traditional banks is 0.46%. Can you see the difference between SoFi high yield interest savings account and traditional banks?
Let us examine how an interest rate of 4.60% APY help you beat inflation.
Assuming you deposit $3000 for savings with SoFi, it will generate $150 annually as compared to $13.8 offered by traditional banks. If you kept a savings of $3000 with SoFi from 2011 to 2022, you would have definitely beat the inflation. This is because your savings is compounding at 4.60% annually, and you will have 46% increase by 2022. In other words, the $3000 will generate $1380 in capital appreciation.
When you think about it, you beat the inflation rate within the time frame by 40.9%. This is gotten from subtracting the inflation rate difference over a period of ten years (2011 to 2022) from your 46% capital appreciation. Traditional banks would have given you a 4.6% capital appreciate over a decade, which is lower than the inflation rate by 0.5%. Therefore, losing a purchasing value by 0.5%.
Minimum Direct Deposit For SoFi High-Yield Savings
SoFi does not have a minimum deposit for you to earn its interest. However, you have to meet one of the following below to qualify for the 4.60% APY on its high yield savings.
- Do a direct deposit every 30 days.
- Or, maintain an account balance of $5000 every 30 days.
Otherwise, you will only earn 1.20% APY on SoFi savings account. To reiterate, you do not necessarily need $5000 in your account. You just need to make a direct deposit every 30 days and you can still earn the 4.60% interest rate on any amount on your savings.
Finally, there is no monthly fees on this savings account. The account is insured by FDIC for up to $250,000 per member. Therefore, making SoFi a safe online bank.
2. Ally High Yield Savings Account
Ally Bank has a high yield savings account. The bank prides itself as having a high interest account which pays about ten times more than the national interest rate of traditional banks. The annual percentage yield for Ally savings is 4.25%.
Ally bank savings interest rate is variable. What this means, is it is subject to change. As of 10-16-2023, the above annual percentage yield is what it is currently offering for its high rate savings account.
Besides, the online bank offered two savings options. They have the Money Market with an interest rate of 4.40% and Savings with 4.25%. The only difference between the two is the interest rate on both options.
The Minimum Balance For Ally High Yield Savings
You do not need a minimum balance for your savings to earn the interest rates mentioned above. The only downside of Ally savings account, is the bank does not accept cash deposit. Your deposit would always have to a transfer or check deposit.
In addition to the above, interest earned may be affected by fees. Ally bank does not have a monthly maintenance fee, however fees such as excessive transaction fee may lower interest earned. This is because it will eat into any interest earned.
3. CIT Bank
CIT Bank has one of the highest interest savings accounts. The average high savings rate at the bank is 4.65%, however it offers three different rates on its three different savings options. Here is what to know about the highest paying savings account at CIT Bank.
The Best Savings Rate at CIT Bank
The high-yield savings rate at CIT bank is classified into three:
| Savings Options | Annual Percentage Yield |
|---|---|
| Platinum Savings | 5.05% Annual percentage yield ($5000 minimum balance) |
| Savings Connect | 4.65% Annual percentage yield |
| Savings Builder | 0.40% (balance < $25,000), 1.00% (balance < $25,000 with $100 monthly or more) and 1.00% for balance greater than $25,000. |
There are other saving options with CIT Bank, but these are the high yield saving account rates. Also, the great thing about these savings accounts is they only need a minimum of $100 to open. If you could, go for the Platinum savings or Savings connect account to earn these annual percentage yields on your savings.
4. Current
Current offers a high yielding savings account with an annual percentage yield of 4%. To qualify for this amount though, you need a monthly deposit of $200 or more on the account. In addition, there is a savings amount requirement to qualify for this high interest rate.
Premium account customers need up to $6000 to earn an annual yield of 4% on the savings account. For basic account users, you only need $2000. Finally, these savings accounts are FDIC insured, so there is no risk saving your money with Current.
5. Go2Bank
Go2Bank has a high interest savings account. The interest rate for GO2bank savings account is 4.50% annual percentage yield. It is great, when you are trying to save money and beat inflation rate year by year.
The 4.50% annual percentage yield compounds year by year, therefore appreciating your initial savings amount. Also, it is noteworthy to mention this is the interest an account with up to $5000 can earn. It is paid quarterly.
6. BMO Alto Online Savings Account
BMO Alto offers one of the highest interest savings accounts on my list. As of the 2nd of November 2023, BMO Alto online savings account has an annual percentage interest rate of 5.10%. This is very high, is it not?
Well, you have not heard the other perks of having this high yield interest savings account.
There is no monthly fee to worry about. The saving account has no minimum balance to maintain. Also, you do not need a minimum amount to open a savings account at BMO Alto. This is besides the unlimited deposits and withdrawals allowed on this account.
7. Discover Bank
Discover bank is another online bank with a high interest rate on its savings account. It pays a 4.35% APY. It is safe to save money in Discover savings account. This is because it is insured by the FDIC. What this means, is your money is insured by the federal government up to $250,000 per person.
Also, there is no monthly fee associated with Discover online savings account. You will not be required to deposit a minimum amount to open this account. So, there is no minimum deposit for this savings account.
Additional questions about these high interest savings account should be directed to the respective banks. I recommend calling the customer care or going to their official websites for more detailed information.
In all, these are the savings account which can help you beat inflation. They have the best interest rates on savings. Rather than having your savings in a traditional bank account which earns an average of 0.46% APY, online banks tend to pay more for their savings accounts.
Do not worry, these banks are federally insured. If you ask me, I would say online banks offering savings accounts with highest APY are here to stay since they meet their customers’ savings goal. Besides, most of these online banks with instant mobile check deposits make money transactions convenient for their customers.
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