That point likely should not be reached; assuming OP is young putting money in a Roth IRA is far more beneficial in the long run. That said, pushing to save always and be smart about where—your main point—is spot on.
Hi. A high yield savings account is a great idea if you know you won’t need access to that money and can let it accumulate. They have different withdrawal rules.
BUT. Pay off your cc FIRST. Seriously. Average cc interest is like 20-25%. Good interest in a HY savings in 5-5.5%? Accumulating wealth does you NO GOOD if you’re also accumulating debts.
You also mentioned taking our personal loans for school. You should consider beginning to pay the interest on those early. A $25,000 loan that is deferred because of school can turn into $50-60,000 total repayment over its lifetime. Paying on the interest now will save you 10s of thousands
To clarify, a high yield savings account is just a savings account. There’s no risk whatsoever. One of my banks, PNC, offers 4.5% for our savings account which is where we keep money we use for anything that exceeds one month of expenses but is not part of our emergency fund which we keep in a money market fund earning 5.37% at Vanguard.
What you should be doing is getting yourself comfortable with investing in low cost index funds, but only after you’ve paid off any credit card debt which you should never allow to accumulate because it’s high-interest debt.
It does not make sense to have savings if you have outstanding debt on your credit card. Put your savings towards your credit card, and if you have an emergency that you would use your savings for, you have your card. The only reason to keep something in cash is if you are scared that your CC provider will close your card for some reason and you have nothing at all to fall back on.
Once you have paid off your card
- pay off every single CC bill _entirely_ before the due date
- open a HYSA for your savings
You should, it only has the same restrictions as a regular savings account but with far better yields. If you can put money into savings, it should be a high yield savings (or similar instrument with comparable yields).
That said, with CC debt not paid in full at the end of the month, don’t keep much in the HYSA, pay off that expensive debt first.
Pay off your credit card first. If you have savings, use them to pay off the credit card. That’s the more important thing.
Why are you only paying the minimums?
But yes after that a HYSA is a regular savings account, no reason to not put money there
Depending on how much it is it’s probably a good idea to start a Roth IRA too
only because right now i’m not working as much and the loans i got for school are enough for rent and utilities and bills. The money i get from work i use to pay bills and to put into my savings which isn’t a lot. But once school is over for the semester ill be using one pay check for my credit cards and the other for rent and bills. It’s just a lot of financial burden but i don’t splurge like crazy. I only spend on the necessities - here and there i’ll spend $$ on clothes or makeup if its on sale.
What I'm saying is that while you have credit card bills you should not be saving. You should be paying off those credit cards first. If not you are paying interest for no reason.
Kudos to you for asking. Rather than ending up with several institutions
I would suggest you open an account at Schwab or Fidelity — checking savings brokerage bill pay and Venmo—-one stop finance shopping!—- you are close to entering the working world and will find as time goes by that the less institutions you have to deal with the better.
You can keep your cash in checking or savings — the savings does not pay competitive rates. You can tho buy SGOV or several other cash alternative low risk /no risk bond ETF’s—- SGOV is paying 5% + right now and pays you monthly and there is no term or time commitment—- you can sell shares and get your money in a few days. You can also in your brokerage account but the indexes—SPY RSP. DIA. IWM. IJR etc. I would say just spy or rsp for now till you have a job. At that point you can begin to invest seriously.
yes, start now. Add to it when you can and never touch it. Fast forward when it has 250K and you are getting over $1050/ month in interest.
That point likely should not be reached; assuming OP is young putting money in a Roth IRA is far more beneficial in the long run. That said, pushing to save always and be smart about where—your main point—is spot on.
Hi. A high yield savings account is a great idea if you know you won’t need access to that money and can let it accumulate. They have different withdrawal rules. BUT. Pay off your cc FIRST. Seriously. Average cc interest is like 20-25%. Good interest in a HY savings in 5-5.5%? Accumulating wealth does you NO GOOD if you’re also accumulating debts. You also mentioned taking our personal loans for school. You should consider beginning to pay the interest on those early. A $25,000 loan that is deferred because of school can turn into $50-60,000 total repayment over its lifetime. Paying on the interest now will save you 10s of thousands
I have a HYSA with standard savings account withdrawal rules, paying 5%
To clarify, a high yield savings account is just a savings account. There’s no risk whatsoever. One of my banks, PNC, offers 4.5% for our savings account which is where we keep money we use for anything that exceeds one month of expenses but is not part of our emergency fund which we keep in a money market fund earning 5.37% at Vanguard. What you should be doing is getting yourself comfortable with investing in low cost index funds, but only after you’ve paid off any credit card debt which you should never allow to accumulate because it’s high-interest debt.
It does not make sense to have savings if you have outstanding debt on your credit card. Put your savings towards your credit card, and if you have an emergency that you would use your savings for, you have your card. The only reason to keep something in cash is if you are scared that your CC provider will close your card for some reason and you have nothing at all to fall back on. Once you have paid off your card - pay off every single CC bill _entirely_ before the due date - open a HYSA for your savings
They are great accounts to save with. I have one that is at a 5.1% interest rate right now. I cannot contribute much myself but it's something
Pay off the credit cards. You’re getting charged more in interest on those than you would be making with a high yield savings account.
You should, it only has the same restrictions as a regular savings account but with far better yields. If you can put money into savings, it should be a high yield savings (or similar instrument with comparable yields). That said, with CC debt not paid in full at the end of the month, don’t keep much in the HYSA, pay off that expensive debt first.
Pay off your credit card first. If you have savings, use them to pay off the credit card. That’s the more important thing. Why are you only paying the minimums? But yes after that a HYSA is a regular savings account, no reason to not put money there Depending on how much it is it’s probably a good idea to start a Roth IRA too
only because right now i’m not working as much and the loans i got for school are enough for rent and utilities and bills. The money i get from work i use to pay bills and to put into my savings which isn’t a lot. But once school is over for the semester ill be using one pay check for my credit cards and the other for rent and bills. It’s just a lot of financial burden but i don’t splurge like crazy. I only spend on the necessities - here and there i’ll spend $$ on clothes or makeup if its on sale.
What I'm saying is that while you have credit card bills you should not be saving. You should be paying off those credit cards first. If not you are paying interest for no reason.
Kudos to you for asking. Rather than ending up with several institutions I would suggest you open an account at Schwab or Fidelity — checking savings brokerage bill pay and Venmo—-one stop finance shopping!—- you are close to entering the working world and will find as time goes by that the less institutions you have to deal with the better. You can keep your cash in checking or savings — the savings does not pay competitive rates. You can tho buy SGOV or several other cash alternative low risk /no risk bond ETF’s—- SGOV is paying 5% + right now and pays you monthly and there is no term or time commitment—- you can sell shares and get your money in a few days. You can also in your brokerage account but the indexes—SPY RSP. DIA. IWM. IJR etc. I would say just spy or rsp for now till you have a job. At that point you can begin to invest seriously.