A high yield account is a deposit account offering higher APY (annual percentage yield) than traditional deposit accounts. High yield accounts are available through both brick-and-mortar and online banks. Such an account requires one to keep a higher initial deposit and maintain a high balance. High yield savings accounts are among the most recommended investments.
Banks that Offer High Yield Accounts
Both online banks and those with a physical setup may offer high yield accounts.
Online banks: As these banks have no major expenses such as those on cashiers, rent and paperwork, they pass the savings to their customers via high yield accounts, offering higher interest.
Brick-and-mortar banks: These banks do not have as large savings as online banks. They offer high yield accounts to valuedcustomers. In order to qualify, one must meet at least one of the following criteria: (a) open with a huge initial deposit (b)maintain a high balance and (c) make limited transactions.
Benefits of a High Yield Account
Advantages of a high yield account include:
High interest rates: The interest on a basic savings account could be as low as 0.20%. High yield accounts offer five-to-tentimes higher interest than basic savings accounts.
Automatic transactions: High yield accounts include facilities like direct deposit, ACH (automated clearinghouse) transactions and automatic deposits.
Pay bills online: Many online high yield accounts offer the free service of paying your bills online.
Easy access to money: A number of high yield accounts offer ATM access at several locations.
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Professor at Columbia University. Recipient of the Nobel Memorial Prize in Economic Sciences in 2001 & the John Bates Clark Medal in 1979. Author of "Freefall: America, Free Markets", "The Sinking of the World Economy", "Globalisation and its Discontents" & "Making Globalisation Work".
Mario I. Blejer is a former governor of the Central Bank of Argentina and former Director of the Center for Central Banking Studies at the Bank of England. Eduardo Levy Yeyati is Professor of Economics at Universidad Torcuato Di Tella and Senior Fellow at The Brookings Institution.
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