How a high-yield savings account can help you reach your savings goals

This content is sponsored by PenFed Credit Union, federally insured by NCUA.

Whether it’s making the most of an end-of-year bonus or getting a headstart on 2024’s savings goals, you may want to consider how to maximize your dollar as the year ends. A high-yield savings account is one way to take advantage of today’s interest rates and earn from your funds. The potential savings value of these accounts can significantly impact your savings goals for 2024.

Unlike traditional savings accounts a high-yield savings account allows you to earn more interest on your savings.

“With a high-yield savings account, you may potentially earn interest or dividends at a rate that’s 10-25 times higher than that of a traditional savings account thanks to a bigger initial deposit,” PenFed Credit Union’s experts said.

However, many Americans are unaware of the financial benefits that high-yield savings accounts can provide.

A Paths to Prosperity Study by Santander US showed that just over 20% of Americans with savings accounts don’t know how much interest they are earning. Sixty-four percent of those who do know their interest rate are receiving less than 3%.

“There’s real opportunity for people here to better their financial health by being aware, and by being willing to take some action,” Tim Wennes — CEO of Santander US — tells USA Today.

A high-yield savings account could help you with various savings goals next year. Tara Alderete, the director of enterprise learning at Money Management International, told this account might be a good option for anyone looking to save money for a large purchase, or a short-term or mid-range financial goal.

If you’re saving for an emergency, you’ll have easy access to your money when you need it, as liquidity is not a common issue with high-yield savings accounts.

When saving for a short-term goal like a vacation or paying off a small amount of debt, a high-yield savings account can help generate more funds to cover expenses.

“Making a big down payment on a purchase like a car can help you lock in a more manageable interest rate,” states. “Any extra funds you can earn in a high-yield savings account can help with that—or even can be put toward your monthly payments.”

PenFed Credit Union’s Premium Online Savings Account is a high-yield savings option that can help you get the most out of your savings. You can earn a 3.00% Annual Percentage Yield and receive over six times the national average on your savings.1 You’ll start earning dividends on the business day you initiate your deposit, which are credited to your account monthly.

Additional benefits of this account include the ability to set up recurring transfers from your account without paying transfer fees, and no monthly maintenance fee.

The earlier you start saving, the better. By consistently depositing funds into a high-yield savings account, you can also take advantage of compound interest.

“Let’s say you put $500 into a savings account and earn $20 in interest in the first month. If your account compounds monthly, the next month you won’t be earning interest on just $500, but on all $520 in your account,” a CBS News MoneyWatch article explains.

There is also a chance that rates could go up next year which would have a positive impact on your money earning you more interest. No matter what your savings goals are, a high-yield savings account is a safe, effective way to set money aside and watch it increase.

“If you’re looking to boost your savings — or if you’re behind on implementing a savings strategy and want to start being more financially responsible — you should consider opening a high-yield savings account right now, before the new year rolls around,” MoneyWatch states.

Read more about a premium online savings account on PenFed Credit Union’s website. PenFed Credit Union is federally insured by NCUA.

  1. APY (Annual Percentage Yield) is accurate as of December 1, 2023 and is subject to change at any time. Fees may reduce earnings. Premium Online Savings account holders must agree to electronic delivery of account opening disclosures and monthly statements. The rate for our Premium Online Savings Account is over 6X the national average of 0.46% APY, based on the national average of savings accounts rates published in the FDIC Weekly National Rates and Rate Caps accurate as of December 1, 2023.
Federal News Network Logo
Log in to your WTOP account for notifications and alerts customized for you.

Sign up