A regular savings account just can't compete
, or interest that grows based on both interest and principal, can grow money over the years. I couldn’t wait to see how it would add up.I chose high-yield savings for my next goal and never looked back
Years later, I’m setting my sights on a different money goal: saving for a down payment for a home. This time, I’m saving differently — I opened a high-yield savings account. These accounts can help savings earn 20 times more than a typical traditional savings account , with no extra effort or risk. It’s basically the same as the savings account I had as a kid — it’s fee-free and free to open. The only difference is that it earns 2% in interest each year, visibly growing my balance.
At the interest rate of .01%, the $100 my grandparents used to start that savings account would earn $0.16 in interest over 16 years. Had that same amount gone into a high-yield savings account at 2% for 16 years, that same $100 would have grown to $137.68.That might not sound like much, but at the scale of the tens of thousands of dollars that a down payment requires, a general savings account can’t compete.
Two percent interest is more on par with what I expected from all that high praise my mom gave interest all those years. Hopefully, these little monthly additions of interest payments will add up by the time I’m ready to buy. I look forward to checking my account each month to see what I earned. . This time around, I certainly won’t make the mistake of missing out on interest again.
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