MONEY BACK FROM TAXES? HERE IS A SURE WAY TO GROW IT

April 15th is right around the corner; did you file your taxes yet?  

The goal should always be to break even, but it's always nice to receive a return.  Want to make the return you receive grow even more..... invest in a high yield savings account!  We were first introduced to this concept about 9 months ago and didn't do it.  The person that told us about it was incredibly happy with the results they were getting.  It took convincing to get my husband on board, but when he did, he was sold.  Sometimes he has to be "sold" on an idea, so I had to do some research.  Below are the articles and facts I learned/read in the process.

[Note: I am not a financial advisor, just someone that loves money.]

WHAT IS A HIGH YIELD SAVINGS ACCOUNT?

Savings account with higher interest then a traditional savings account.  Sometimes as much as 10x's higher!  It is often found at credit unions or traditional banks.  Traditional savings accounts typicall offer less than 1% interest.  Therefore, if you have $1,000 in the account at .45%; you will receive $4.50 at the end of a year.  Congrats, you didn't even earn enough for a drink at Starbucks!  

High yield savings accounts offer interests rates between 4% - 5.75%!  Quite the difference. 

HOW ARE THEY ABLE TO OFFER THESE RATES?

Now this was the biggest questions we had.  What made these banks different from others that they could offer such a rate?  What's the deal?  Well, in summary, the banks use your money to offer out loans.  Also, many banks that offer these accounts do not have "brick and mortar" stores.  Therefore, overhead is less.  For example. we currently using Synchrony Bank.  That may sound familiar to you as this is the bank that many furniture stores, use for offering financing.  

Here is a great article I found that list pros and cons.  I listed below for your convenience but check out the full article as well.

PROS:

• They have a much higher interest rate than traditional savings accounts. Like I mentioned, high-yield savings accounts sometimes offer 10 times the interest of traditional savings accounts.

• The money you put in is super safe. High-yield savings accounts at legitimate banks—even online banks—are backed by the Federal Deposit Insurance Corporation (FDIC), which insures your deposits up to $250,000 with the backing of the federal government. Legitimate online credit unions are backed by the National Credit Union Administration (NCUA). All those letters simply mean your money’s not going anywhere.

• You can access the money at any time. Unlike some investments where it can be difficult to pull your money out at a moment’s notice, high-yield savings accounts allow you to access the money at any time. That makes them a great place for keeping an emergency fund or a down payment fund if you’re saving for a house.

CONS:

• They’re not a good long-term investment. Though high-yield savings accounts provide a much higher rate of return than traditional savings accounts, they’re still lousy for long-term investing. Even if a bank offers a rate of 4% or more, it doesn’t come close to the 10–12% rate of return that good mutual funds with long track records of success have historically averaged. That’s where you need to do your long-term investing for retirement or anything else more than five years down the road.

• The interest rate can change at any time. Did you find a great high-yield savings account with an online bank offering a 4.5% interest rate? Well, it may not last long. Banks can change their interest rates for savings accounts whenever they want, which means your rate isn’t a long-term (or even short-term) guarantee.

• They’re usually online only. If you’re the kind of person who hates going to the bank in person, then this one doesn’t affect you. But if you prefer talking to your bankers face-to-face and making deposits in person, then getting a high-yield savings account through an online bank may not be your cup of tea. But remember, you can still use a local bank for your everyday checking account.

Synchrony offers FAQ's as well.  Check them out here.

MY TIPS:

- Find the best interest rate available 

- Make sure the account if FDIC Insured

- No min required to start (this will allow you to start small and "test the water" if you aren't completely sold yet.  Trust me, once you see the first few interest amounts, you will quickly add more to the account.)

Good luck and happy savings!