Kelly Blodgett launched Money Gal Coaching with a goal of serving people who, like her, were burdened by debt. You can get her tips for paying down debt on a regular basis at Bring Me The News, in addition to the Money Gal Coaching website and Facebook page. In her words, these are tips and tricks that she used to pay off debt.
Not to start off with a cliché Albert Einstein quote but “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”
I lead with this because not only is it so true, but I'm willing to bet you’re paying interest on something as you are reading this (and probably on a few things).
But there is hope! The easiest way that anyone can take advantage of compound interest is to start a high-yield savings account. If you are asking yourself, ‘what the heck is that?’ then you are in exactly the right place.
A high-yield savings account features a higher interest rate and generates more returns, which is a fancy way of saying that it gives you more money back for just having money in the bank. Yes, real money, not rewards or points.
Money.com goes into detail explaining that “unlike other methods of generating returns, such as investing in the stock market, putting your money in a high-yield savings account poses little to no risk...if you’re going to hold cash, you want to seek out a bank that has consistently competitive rates to maximize earnings on that cash.”
Pro tip: Since the amount of interest earned depends on the amount of money you have in the account, be sure your savings for larger purchases are in this account, such as a down payment for a house, vacation fund or your emergency fund.
Here are how the numbers break down:
If you have $2,000 in a checking account with a standard APY of 0.06%, you would earn $1.20 over the course of a year. In a high-yield savings account with a 1% APY, you would earn $20 a year.
Be sure to read the details of your high-yield checking account because they all are a little different. They will have different interest rates, requirements on an initial deposit or minimum balance and some might even have fees.
Here are some examples of some accounts you may want to look into, but be sure to do your research and find an account that will fit your needs!
Get in touch with Kelly from Money Gal Coaching
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