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The author, Jen Glantz.
Daphne Youree
I used to keep my money in a typical bank savings account earning next to nothing in interest.
My husband convinced me to switch to an Ally high-yield savings account and I’ve never looked back.
Roundups, easy-access CDs, and other features help me maximize my interest earnings.
Three years ago, before my husband and I were married, we sat down and shared our entire financial portfolios with one another. Within just a few seconds of showing him that I stored all my cash in a savings account that generated 0.01% APY, he reacted with panic.
I had no idea that my money would grow faster if it was in a high-yield savings account with a much higher annual percent yield.
Since moving my money into a high-yield savings account at Ally, where the APY is currently 2%, I’ve been able to grow my cash and take advantage of perks offered through my account that help me earn more money every year. Here’s how I maximize those features.
I swap between the HYSA and a flexible CD
During the pandemic, when the Federal Reserve lowered interest rates, the APY for my high-yield savings account dropped, and the money in my account was earning less than before (it went from over 2% to 0.5%).
One of the perks of Ally is that they often offer special and limited deals on high-interest-earning CDs. I put a large chunk of money, for the first time, into a CD that offered 2% interest, with no penalty for withdrawing the money.
Because it was so easy to transfer the cash back and forth, I moved money in and out of the CD when my high-yield savings account APY climbed back up again.
Comparing these rates to my old bank, I noticed that the APY and promotional CD rates were at least 50% higher.
My account offers a roundup program
One perk Ally offers is a roundup program that’s tied to my checking account. When I make transactions with my debit card, the bank automatically rounds up the purchase to the nearest dollar and then transfers that money to my savings account once it hits $5. For example, if I buy something for $6.50, the bank will take an extra $0.50 from my checking account and make note of it to eventually move to my HYSA.
While making transfers between my checking and savings is something I can do manually, and do often, having this round-up program helps me accumulate even more money in my HYSA without thinking about it.
My HYSA compounds interest daily
One thing I never realized about my savings account at my old bank was that the money in the account compounded interest monthly, which means any money deposited today will only grow once a month, and then that new balance will grow the next month.
My current bank compounds interest daily, which means every dollar that gets put in automatically starts to grow at a faster rate than it would if the compounding happened monthly.
Since I often deposit money a few times a week, the daily compounding of that cash helps me earn more money every year.
I don’t have to pay any fees
With my old savings account, I was hit with an $8 monthly maintenance fee if I didn’t have a daily balance of $500. While the fee seems low, it can add up over the year and take away from growth.
A perk of my current HYSA is that there’s no minimum amount that has to be in the account and no monthly maintenance fees. This helps me keep my cash in a place that’s growing on a daily basis, without having to worry about getting charged fees along the way.