What to do with your pandemic savings 2 - Santander Bank High Yield Savings
What to do with your pandemic savings
If you have an excess of cash sitting in your checking or standard savings account, it’s time to get a plan.
The last year has allowed many of us to dramatically cut our monthly expenditures. Working at home has reduced or eliminated commuter costs, restaurant bills, office clothing purchases, and more, leaving some with an excess of funds on hand.
Of course, now comes the question: "What do I do with this extra money?"
If you find yourself in this position, consider these compelling reasons for putting the funds to work in a high-yield savings account today.
10x the savings power
Because the cost savings this past year was as unexpected as the pandemic itself, many people had no plan for what to do with their surplus funds. Typically, this money remained in a checking or standard savings account.
The problem with this choice is that interest-bearing checking and savings accounts typically earn a negligible 0.01% annual percentage rate (APY). So, most of these individuals have been receiving barely any returns on their deposits.
There are many options to grow savings, but if you're saving with a goal to utilize the funds near term, a high-yield savings account is a great solution. For instance, the Santander® High Yield Savings account can earn more than the national average.* That may translate into significantly higher earning potential that doesn’t tie up your money in a more aggressive, retirement-focused fund or investments.
High-yield savings accounts will typically afford you the freedom to access some or all of your funds when you need them. It’s what makes them great for earning bigger returns on funds that you need to remain liquid.
In exchange for this flexibility, of course, you may have monthly fees and need to maintain a minimum balance. Look for an account that balances a competitive rate while requiring no fees and a low or even no minimum balance. The Santander® High Yield Savings account sets the bar in this respect, requiring $5,000 to open, but then doesn't require you to maintain a minimum balance and has no Monthly Fee. To take advantage of the top market savings rate, though, you must maintain a balance of at least $5,000.
You may have a savings goal in mind, but it's easy to lose sight of these objectives when your savings for one goal are mixed together with money designated for another purpose — or maybe even mixed together with funds for multiple goals.
We encourage you to check with your own financial advisors to determine what works best for you, but suggest opening a separate account for each goal. It helps you stay focused on reaching your savings objectives, while affording you complete transparency into exactly how fast your money is growing for each savings objective. To assist you in evaluating whether this strategy would work for you, Santander offers a savings calculator to help you see how much faster your funds can grow in a high-yield savings account over time.
One final consideration for you is the security of your funds. Every reputable bank in the U.S. offers $250,000 in FDIC coverage to protect your deposits. However, many people don’t realize that this protection is not coverage for each account balance, but is rather the total coverage for all of the account holder's deposits with that bank. When considering which high-yield savings account to trust, it makes sense to explore banks outside of your primary banking relationship. This will instantly earn you FDIC coverage for another $250,000 to protect your money as it grows. Visit FDIC.gov for more information.
If you have an excess of cash sitting in your checking or standard savings account, it's time to get a plan. Talk to your financial advisors to find a strategy that’s right for you. Also remember, we’re always here to help as well. Please feel free to contact us if you have any questions or need additional assistance in reaching more of your savings goals.
*Rates are available in select markets only and subject to change. APY shown is for balances of $5,000.00- $2,999,999.99. See more on rate tiers here.