- A high-yield savings account is a simple concept: You save money faster due to a higher rate.
- There are a few key considerations when choosing a high-yield savings account — such as the Annual Percentage Yield and fee structure.
A high-yield savings account is a simple concept: You save money faster due to a higher interest rate.
Doctors often have a hard time building savings early in their careers. Most doctors are carrying an outsized amount of debt from medical, dental, or veterinary school, then may have years of low income as residents and fellows, preventing meaningful savings.
Despite this challenge, building savings is important to achieving long-term financial goals. Utilizing a high-yield savings account allows for a liquid source of money you are able to contribute to that grows faster than a traditional checking or savings account.
What is a high-yield savings account?
A high-yield savings account is a savings account that can offer a much higher interest rate than a typical savings account. High-yield savings accounts typically pay 20 to 25 times the national average of a standard savings account.
What can you use a high-yield savings account for?
High-yield savings accounts can be used for any savings, but they can be particularly useful for things such as an emergency fund or savings goals for a large purchase.
Many financial experts recommend having a three-to-six month emergency fund ready for those unexpected expenses. When you start making money, building one up should be one of your first priorities to protect yourself against financial shocks, but for recent medical school graduates, this can be difficult. High-yield savings accounts can help you get there sooner than a traditional savings account.
Other savings scenarios that may be opportunities to open a high-yield savings account include:
- A new or used car
- A down payment on a home
- A wedding
- New furniture
- Educational expenses
Benefits of a high-yield savings account
A high-yield savings account can help you save money faster in a safe and accessible way.
You save money faster
When your account earns a higher annual percentage yield, your money grows faster than a regular savings or checking account. Simple as that.
For example, let’s say you have $10,000 in your savings account. If this money was in an average savings account, the yield could be as low as .05% APY. At the end of the year, you would add just $5 to your savings from interest (based on daily compounding interest).
But the same amount of money in a high-yield savings account with a .95% APY would grow to $10,095 at the end of the year (based on daily compounding interest).
While an extra $95 might not seem like a lot of money right away, it makes a big difference over time. The interest continues to accumulate on the growing amount, and this passive income can help you save for the future faster.
Your money is protected
A high-yield savings account doesn’t come with the volatility of the stock market, so you’ll never lose any of your principal on a bad day. Instead, you’ll have a fixed interest rate, and your money will always be growing.
As an example, make sure any high-yield savings account is FDIC insured which protects the account up to $250,000.
What to look for in a high-yield savings account
Not all high-yield savings accounts look the same. Know what to look for so you can choose one with confidence.
It is easy to go with the highest rate on a high-yield savings account, but there are other factors that should be considered. A competitive rate — which may not be the highest option — and favorable account structures will set you up for success.
Fees and minimum balances
Annual fees and minimum balances should be avoided when opening a high-yield savings account. We recommend never opening a bank account with annual fees or that requires you to keep a certain balance in the account.
Fully digital banking
While many banks are competing for your business with a high-yield savings account, most are unwilling to offer a competitive interest rate in a fully digital manner — meaning without a personal interaction with a banker.
Newer, online banks have more flexibility and are able to offer you a great high-yield savings account.
Bonus: Companion checking account
Though housing checking and savings accounts at the same bank is not necessary, it can be a great additional benefit, making transfer between accounts even easier.
Benefits of a Panacea Financial high-yield savings account
The interest rate on a Panacea Financial high-yield savings account is well over the national average — so your money grows faster.
You also get a competitive rate, 24/7 customer support, your own personal banker, and a minimum requirement of just $25 to open the account. You don’t need to have thousands (or hundred of thousands) of dollars to get these benefits.
And since Panacea Financial is all digital, you have complete access to your money and the ability to move it around anytime.
Check out all the features of a Panacea High-Yield Savings Account.
When you’re ready you can click here to apply – it takes less than 8 minutes.
Panacea Financial, a division of Primis. Member FDIC.