High Interest Savings Account

By: EconomyWatch   Date: 9 September 2010

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A high interest savings account can yield higher returns than a conventional savings account. Due to stiffcompetition in the banking industry, banks continuously introduce new versions of savings account with improved features. While a basic savings account yields an interest rate of not more than 4% on the deposited amount, a high interest savings accountcan yield a higher interest rate and help grow your money faster.

High Interest Savings Account: Benefits

Advantages of a high interest savings account include:

  • A high interest savings account can be managed online.


  • Fees, if any, are minimal.


  • If one does not make any withdrawals during a certain period, the bank may offer a bonus in the form of extra interest.



    • High Interest Savings Account: Considerations

    While applying for a high interest savings account, one must consider the following:

    • Types of savings accounts: There are two types of savings accounts - regular and deposit. In a deposit savings account, one is required to deposit a fixed amount for a certain period of time, such as one year or five years. Most banks allow customers to deposit more than the fixed amount. However, if your balance is below the fixed amount, your interest for that month will be forfeited. A regular savings account does not set any such restriction. One is free to deposit as little or as much as he or she wants. The offered interest rate is, however, lower than the deposit savings account.


    • Level of Access to Money: The interest that you earn on a high interest savings account is determined by the level of access to money. One is free to choose a flexible savings account or limited access account according to his or her needs. A flexible savings account allows one to deposit and withdraw money whenever the need arises, without any charge. In a limited access account, one has to submit a notification one to three months in advance of making the withdrawal. Else, an interest penalty will have to be borne by the account holder.

    Another aspect to consider is the procedure of the interest paid. Most banks will pay interest once a year, while some may credit your interest on a monthly basis.


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