3 Reasons to Open a High-Yield Savings Account in October
KEY POINTS
- There's little benefit to keeping your savings in your checking account.
- A high-yield savings account (HYSA) is an ideal place to keep extra money because you can boost your balance as you earn interest.
- You may want to open an HYSA this October to get rewarded for saving, maximize the interest you earn, and take advantage of higher rates before APYs drop.
Having emergency savings is a great way to be financially prepared. But where you keep your extra cash matters. Of course, you'll want to avoid hoarding it under your mattress. Instead, you should stash it in a bank account. But not just any bank account.
Keeping your extra savings in an interest-earning bank account, like a high-yield savings account (HYSA), is a smart strategy. By doing this, you can earn extra money from interest. Here's why you may want to open an HYSA in October.
1. Earn interest while your money sits in the bank
Many people keep their savings in their checking accounts. You may assume this is a good move because you'll have easy access to your money. But most checking accounts don't earn interest. That means you're not getting rewarded for keeping your extra cash in the bank.
Every extra cent you earn from interest is a win. Whether you have $100, $1,000, or $10,000 saved, you can benefit by earning interest. After all, who doesn't like extra money?
Our Picks for the Best High-Yield Savings Accounts of 2024
| Product | APY | Min. to Earn | |
American Express® High Yield Savings
Member FDIC.
APY
3.80%
Rate info
3.80% annual percentage yield as of January 4, 2025. Terms apply.
Min. to earn
$0
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
3.80%
Rate info
3.80% annual percentage yield as of January 4, 2025. Terms apply.
|
$0
|
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
Capital One 360 Performance Savings
Member FDIC.
APY
3.80%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.
Min. to earn
$0
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
3.80%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.
|
$0
|
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
Western Alliance Bank High-Yield Savings Premier
Member FDIC.
APY
4.40%
Rate info
The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.
Min. to earn
$500 to open, $0.01 for max APY
Open Account for Western Alliance Bank High-Yield Savings Premier
On Western Alliance Bank's Secure Website. |
4.40%
Rate info
The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.
|
$500 to open, $0.01 for max APY
|
Open Account for Western Alliance Bank High-Yield Savings Premier
On Western Alliance Bank's Secure Website. |
Plus, you can access your savings at any time when it's in an HYSA. You can transfer the money to your checking account within a few days. If you'd feel better having some money more accessible, consider keeping a portion of your savings in your checking account. But stash the rest in your HYSA so you earn interest.
2. Maximize the interest you earn
Not all savings accounts are created equal. Some savings accounts dish out less interest than others. If you already have a savings account, that's great news. You're already one step ahead of those with only a checking account. But are you earning as much as possible?
Before opening a new savings account, research the annual percentage yield (APY). The APY is the amount of money you can expect to earn by keeping your money in the bank for one year. Many savings accounts offered by traditional banks have low APYs.
You may earn more interest with an HYSA because these accounts typically offer higher APYs than regular savings accounts. How much more? Let's imagine your bank's savings account offers 0.42% APY. This is the national average APY for such an account according to the FDIC.
If you instead keep your money in an HYSA with a 4.10% APY, you'll earn much more. Here's how much you'll earn if you keep $5,000 in these accounts for an entire year.
| Bank Account | Interest Earned |
|---|---|
| Savings account with 0.46% APY | $23 |
| HYSA with 4.10% APY | $205 |
That's an additional $182 by stashing your savings in an HYSA.
Ready to maximize the interest you earn from your savings? Consider opening a Capital One 360 Performance Savings account -- which currently offers an APY of 3.80%. Click here to learn more and open an account today.
3. Interest rates may continue to drop in the coming months
On Sept. 18, 2024, the Federal Reserve announced that the target federal funds rate would be reduced by half a percentage point. The benchmark federal funds rate range is now 4.75% to 5.00%. This is the rate at which banks and credit unions lend money to each other.
When the federal funds rate changes, banks and credit unions tend to adjust the rates for consumer banking products. Many banks have already adjusted the APYs for savings accounts and HYSAs. When this happens, savers earn less interest.
The federal funds rate could be reduced further at the next scheduled meeting in November. In turn, savers could see their rates adjusted, too. If APYs drop further, savers will earn less interest.
Now is an excellent time to open an HYSA. By opening an account in October and stashing your savings there, you can earn as much interest as possible before rates potentially drop. It's advantageous to open an account sooner rather than later.
Make money moves that benefit you
When deciding what types of financial accounts to use, consider your goals and strategize to make choices that offer you the most benefit. Keeping your extra cash in an HYSA is an excellent option if you're saving for emergencies or a future goal. Consider opening an account soon.
Our Research Expert
Natasha is a freelance writer who specializes in personal finance, credit card, credit card rewards, and travel hacking content.
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