Higher interest rates are most certainly in the future but experts aren't optimistic they will come anytime soon. “We may see small gains in high-yield savings account yields in 2022,” Ken Tumin, founder of DepositAccounts.com, said. “Widespread gains are unlikely until at least 2024.
High-yield savings offer zero risk
The amount of interest you're earning on your money in a savings account may decrease, but your cash will not. For instance, the money you put into a Synchrony Bank High Yield Savings or Varo Savings Account will always be guaranteed, but the account's APY will likely go up and down.
Best High-Yield Savings Account Rates
9 Best South African Savings Accounts That Pay The Highest Interest Rates
| Bank: | Account Type: | Interest Rate: |
|---|---|---|
| Nedbank | Savings Account | 2.75% – 7.51% |
| Capitec | Global One Savings Account | 2.25% |
| Standard Bank | Savings Account | 1.35% – 6.42% |
| ABSA Bank | Savings Account | 0% – 6.75% |
Locking in your interest rate can be tempting, here's why: Mortgage rates could rise after you lock. The threat of a higher mortgage interest rate can be a strong reason to lock in a rate that you're comfortable with. Peace of mind.
There are two companies – Insight and Netspend – that offer prepaid debit cards that also come with FDIC insured savings accounts that earn 5% interest. They take some work to set up, but once you go through that process, the accounts run themselves.
Online transfers between your physical checking account and your online savings account take a few days. So if you need money immediately, you may be out of luck. You can't withdraw money from an ATM or at a physical branch unlike accounts held at brick and mortar banks.
In short, MMAs might be a better option, depending on the rate, if the goal is to park some cash for a short period, or if you don't want to actively manage your savings. MMAs provide access to your money when you need it, pay a higher rate than savings accounts while requiring a minimum amount of effort on your part.
How much interest can you earn on $1,000? If you're able to put away a bigger chunk of money, you'll earn more interest. Save $1,000 for a year at 0.01% APY, and you'll end up with $1,000.10. If you put the same $1,000 in a high-yield savings account, you could earn about $5 after a year.
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