This post may contain affiliate links. Please see my disclosure to learn more.
Wow! It’s finally happening! High-yield savings account rates are up. Today, we are seeing the highest return since the pandemic in 2020. Marcus HYSA (high-yield savings account) are at 2.5% but my readers get an additional 1% APY bonus if they sign up through my link here. That means that by signing up today, you can secure 3.5% rate of return on your savings for the first 3 months. I wrote about what HYSAs are here, but I thought I would provide an explanation as to why I this is the perfect avenue for short-term savings in today’s post.
HYSAs are low risk investment options for short-term savings:
HYSAs are low-risk investment options for short-term savings. How is this different from the stock market?
I like to use the stock market for my buy-and-hold strategy. Because of fluctuations in the market, the value of my investments could go up or down any day. The only way to beat the market is to buy and hold long-term. Historical data has proven that staying in the stock market for a long period of time is the best strategy.
The stock market’s volatility also means that I would not want to keep my short-term savings in it. Short-term savings refer to money that I am saving up for a particular event. In my case, my short-term savings was for the resumption of student loans. With the student debt interest rate at 0% since the pandemic started, we had decided to put our savings in a HYSA to earn interest on it over time. Unlike the volatile stock market, this rate of return is guaranteed, and can not go negative.
Examples of short-term savings:
- Saving for a house
- Saving for the birth of a baby
- Preparing for student loan repayment to resume
- Saving for next round of school tuition
- Saving for an emergency fund
- Saving for a wedding
- Planning a trip/travel
- Buying a new car
Why are HYSAs better than a savings account?
Savings account at other banks have a much lower interest rate. For example, I do my banking with Chase bank and at the time of writing this post is 0.01%. Compare that to 3.5% that you get by using my referral sign-up bonus! That means that if you have $10,000 in your savings account, you will earn $1 from Chase, and $350 from HYSA every year. That’s a no-brainer for me.
Why choose Marcus for your HYSA?
Marcus provides a return rate that is 4x the national average. It also is FDIC-insured for up to $250,000. That means you can put your savings here to rest without worrying about the value going down. Marcus in particular is backed by Goldman Sachs, a long trusted company. They also have same-day transfers up to $100,000 to and from most banks. This means that your money is readily available should you need it.
Would it be better to pay off credit card debt or save in a HYSA account?
While HYSAs are perfect for short-term savings, I think it is always better to pay off credit card debt first. The reason is because credit cards charge an interest rate much higher than what you would earn by stowing away dollars in a Marcus HYSA. That being said, if you struggle with credit card debt, may I recommend The Credit Pros and their expert services? (*aff) Paying off credit card debt was the first thing we did on our student loan repayment journey, and it was the thing that catapulted us forward towards financial independence. I highly recommend!
This post may contain affiliate links. Please see my disclosure to learn more. A friendly reminder that this is an opinion piece written by yours truly and should not be considered professional financial advice.