A frequent question I receive is how do I grow my money with taking little to no risk at all if investing in the stock market is not for me? The answer I always give for those who are much more conservative is to open up an American Express High-Yield Personal Savings account. As I am writing this blog post at this very moment, the annual percent yield (APY) is 1.35%. And yes, opening up an account is completely free.
The benefit of a high-yield personal savings account is that your money is exposed to close to no risk, FDIC-insured, and you are eligible to gain 1.35% (subject to change) of interest each year after taking into consideration of compounding interest. I know a lot of folks I speak to currently have a savings account with a big commercial bank like Chase, Bank of America, or Wells Fargo, and each month they get mere pennies back in interest for parking their funds there because the interest rate is some measly 0.01%.
I am here to say that the online American Express High-Yield Personal Savings account is literally the same thing with the exception of you being eligible to earning higher returns from the interest rates. In other words, you are missing out on some free money if you are parking your money in one of those big commercial banks.
American Express High-Yield Personal Savings
- 1.35% APY interest rate (as of 12/22/2017)
- No fees whatsoever
- Backed by a very reputable company in American Express
- Easy to link bank accounts for deposits/withdrawals
In general the nature of a savings account is to not touch the funds unless it is an emergency or urgent. Typically, savings account are used as a rainy day fund or for any surplus money so activity on withdrawing from the account should be relatively low. The only drawbacks I can see is that the account is online and American Express does not currently offer a checking account, so transferring funds from your savings to your checking from another bank could take 3-5 business days. However, with a little planning, the hassle may be worthwhile for that extra 1.35% interest rate. And of course, you can withdraw anytime you like.
Now, you may be asking how American Express is able to offer such a service? In laymen terms, American Express is paying you some interest so the bank can use your funds to do what they please behind the scenes to reinvest the money to make even more money for the bank. Of course, this will all be done behind the scenes and the bank assumes all liability. Your funds will still always be present and eligible for withdrawal upon request. The balance will or should, never disappear.
I highly recommend you to play with the interest calculator before opening up an American Express High-Yield Personal Savings to see your potential earnings. If you are still parking your surplus money in a savings account with a big commercial bank, you are doing it all wrong! There is literally no downside, but all to gain really.