How to make the most of your as-of-yet unopened savings account
Some of us know the power of a savings account. Some of us only interact with our savings account when we transfer money to our checking in the drive through line. We’re all on a journey. But savings accounts can do more for you; they can earn you interest on your deposits. More importantly, some banks can offer savings account bonuses for opening an account with them. Should you do that? And how to know what the best savings account bonuses are? Well, that’s where we come in.
The Wysh Blog
- What is a savings account?
- How do savings account bonuses work?
- What kind of savings account bonuses can I get?
- How to choose the right online savings account
- High yield savings accounts
- Are savings account bonuses taxable?
- Savings+—the high yield savings account from Wysh
- TL; DR
What is a savings account?
A savings account is a financial product that earns a (modest) amount of interest on your deposited money. They’re different from checking accounts in that a checking account allows for quick access to cash on an ongoing basis. Savings accounts typically have withdrawal limits, accrue interest and are more used for long-term financial planning purposes.
The Federal Deposit Insurance Corporation (FDIC) protects bank customers in the event that an FDIC-insured depository institution fails. Bank customers don’t need to purchase deposit insurance; it is automatic for any deposit account opened at an FDIC-insured bank. Deposits are insured up to at least $250,000 per depositor, per FDIC-insured bank, per ownership category.
The interest your savings account can accrue over a year is called the annual percentage yield (or APY). The APY includes compounding interest, which is when your principal and compounding interest earn interest. APYs can differ dramatically depending on the institution. APYs can also be variable, so it’s important to pay attention to your institution to make sure you’re aware of everything.
How do savings account bonuses work?
Savings account bonuses are promotions designed to get you to open an account. Banks want you to open an account with them and so they’ll offer you an incentive to bank with them and not the competition. Which is good news for you because it means sweeter deals on the consumer side.
These bonuses can range from $100 up to $3,000 depending on things like your bank and initial deposit amount, among other factors. However, larger bonuses might require additional actions, so it’s important to read the terms and conditions. For example, you may have to deposit a specific amount of money for a set amount of time or make a minimum number of bill payments. It all depends on the bank you’re opening the account with.
What kind of savings account bonuses can I get?
The kind of bonus you may receive depends on the bank, the type of account and the specific actions required. We mentioned that you might expect anywhere from $100 up to $3,000 depending on the previous factors. But you may also see additional bonuses such as interest rate boosts for saving a certain amount of money as well as the cash bonus.
How to choose the right online savings account
The best way to figure out the best online savings account or even the best high interest savings account is to consider your needs and the features you most value. Important considerations would be things like interest rates, minimum balances, any fees or deposit requirements, and accessibility. Interest rates are very important to look at, especially high yield savings accounts. You’ll want to look at how much compound interest the account will earn.
High yield savings accounts
High yield savings accounts are different from traditional savings accounts in that they offer higher interest rates which allows your money to grow faster. These higher interest rates are referred to as compound interest rates. The rate of the compounded interest can vary depending on the savings account.
A huge plus for high yield savings accounts is that the Federal Reserve announced in July that it would raise the federal fund rate, the rate which commercial banks use to borrow and lend money to each other, for the fourth time this year. This won’t have an effect on any specific savings account bonuses, but it does mean that savings account interest rates are better for consumers.
Are savings account bonuses taxable?
Unfortunately, yes, they are taxable. Interests from your savings account are taxed at the same rate as your income. Some institutions send out a 1099-MISC form instead of, or in addition to, a 1099-INT form while others don’t send any forms at all. However, if you don’t receive the forms, it’s still important to report those bonuses correctly when filing your taxes.
Savings+— the high yield savings account from Wysh
At Wysh, we believe in financial protection for all. That’s why our most recent product, Savings+ comes with a benefit unlike any other in the US up to this point. When you deposit money into your Savings+ account, you accrue interest with our 4.00% APY.1
You’ll also begin accruing micro life insurance through the account as well!2 Depending on how much you deposit, you could earn up to $10,000 in life insurance coverage to be delivered to your beneficiaries, if you were to pass away. That means your loved ones would receive the contents of your account PLUS any additional payout you’ve earned. That payout could go to help cover any final expenses such as funeral or medical costs.
Head on over to wysh.com/savings to learn more about how a Savings+ account can earn you more than just interest.
- Savings accounts are financial products that earn interest on deposited moneys
- The FDIC protects bank customers in the event that an FDIC-insured depository institution fails. Bank customers don’t need to purchase deposit insurance; it is automatic for any deposit account opened at an FDIC-insured bank. Deposits are insured up to at least $250,000 per depositor, per FDIC-insured bank, per ownership category.
- Savings account bonuses are promotions designed to get you to open an account
- High yield savings accounts offer higher interest rates than traditional savings accounts, which lets you grow your money faster
- Bonuses for opening a savings account are taxable, so don’t forget to file them on your taxes
Wysh Financial, LLC is a financial technology company, not a bank. Banking services provided by nbkc bank, Member FDIC.
1 - Accounts provided by nbkc bank, Member FDIC. Annual Percentage Yield (APY) of 4.00% is as of August 7, 2023 and may change at any time. No minimum opening deposit or minimum balance required.
2 - Benefit is calculated as a percentage, set by Wysh Financial, LLC, multiplied by the average of the monthly trailing average balance of your account for each of the prior three months. Life Insurance only available between ages 18-79. Benefit for customers between ages 18-64 is 10%. Benefit for customers between ages 65-79 is 1%. Maximum benefit is $10,000. Your coverage becomes effective 91 days after you open an eligible account. Terms subject to change