High Yield Checking, Savings & Brokerage Accounts

For those old enough to remember, a “High Yield” Checking or Savings account used to be a place to put your money when you needed to gain interest income while still having access to the cash in your account.   

These accounts encouraged individuals and businesses to “lend” their money to banks or credit unions and the institutions provided solid interest income in return for leaving the monies in the account.  The banks and credit unions made their money by lending the money to local community businesses and individuals.    

These days many banks and credit unions pay little or no interest on money left in their accounts.  And some charge more in annual fees than the interest received on the cash in your account. 

One alternative to a checking and savings account is a high yield brokerage account. Some brokerage accounts allow account owners to gain yields closer to what the banks are able to provide in the days of old while still allowing access to the money via a debit card or checking account.  

It is important to know a few things about putting cash into any account with the goal of obtaining better interest income.  

  1. “Net” Yield is more important than advertised yield.  It is common for advertised yields to be higher than the actual yield received due to account limits, transaction costs and fees.  So do your homework and figure out what you will actually receive in yield by putting your money in the account. 
  2. Yield rates change frequently.  Most rates are tied to the Federal Reserve rate.  These rates can change any time and your cash may be better placed into a longer term contract if you really need the yield to stay at its current level.    
  3. Jumping at a high rate that only lasts a few months is a recipe for creating more work for yourself.  Sometimes figuring out a realistic yield for a given period of time is required because advertised rates can be short lived.  
  4. Interest income from checking, savings and brokerage accounts is taxed if the money is held in a taxable account. So just because you receive 1% interest does not mean you will keep 1% interest.  

Contact us today to find out if you may be able to earn a higher interest rate than your bank or credit union currently provides.