High Yield Online Savings Account What Do They Actually Mean
Basically, a high yield online savings account means an account that gives a high growth rate for your savings. Since your savings account will accumulate interest each month, the concept of rate of interest is important here. When an account has a high rate of interest, it is bound to grow in savings significantly also. So, essentially a high yield online savings account is an account that has a high rate of interest.
Now, it is very difficult to find high yielding savings account in the offline world. Your physical bank, however best it tries, will not be able to give you a considerably greater rate of interest in comparison to the other physical banks. That is because these banks need to have physical premises, maintain them, equip them with staff, pay their salaries and so on. All these things attract a lot of overhead costs for the banks. It is due to these reasons that high street banks are not able to have high yield savings accounts even if they mean well to do so.
That necessarily implies that high yield accounts are available only in the online world, which is quite justified because they do not have all the aforementioned costs. Resultantly, they are able to pass on those benefits to their customers. You should not be surprised even if you find that a high yield online savings account pays you an interest rate that’s ten times higher than your existing physical bank.
That is not to say that offline banks do not have high yielding accounts at all. They do have, but they make these accounts available only to some clients who prove their eligibilities through certain criteria. Now, different physical banks have different criteria to select people for high yielding accounts; however, the following four are the most commonly considered:-
1. The account holder should be able to make a large amount of deposit initially when opening the account.
2. The account holder must maintain a high balance in the account that rolls over from one month to the other.
3. The account holder must not withdraw a lot of money from the account, and must not withdraw too frequently either.
4. The account holder must ideally use other services of the same bank, such as their credit cards or a home loan or such.
Most physical financial institutions will provide people with high yielding accounts if they are able to meet with these requirements. If you do not wish to involve yourself with online banking and still want to have a high yielding savings account, this may be the route you can take.
However, the story with online savings banks is totally different. They do not typically need these requirements because of the less running costs they fact. Some of these will give a high yield online savings account even with a deposit that is as little as a dollar. The only thing that you need to remember is that all your dealings will be then handled online. There won’t be a human face to interact with – for all your bank transactions, you will need to login to the banking website.