Why You Should Open A High Yield Savings Account And Follow These Tips To Help You Pay Off Your Debt

Placing some of your remaining cash in a high-yield savings account can act as a buffer against unforeseen emergencies and help you pay off existing debt. (iStock)

Savings can provide a buffer against unexpected personal financial emergencies. When the economy is booming, people tend to spend more and save less. When the economy is slow, personal savings increase. During the coronavirus pandemic, Americans began to save more.

High yield savings accounts offer higher interest rates than traditional savings accounts or a checking account, which probably earns no interest or has a much lower interest rate. When you’re paying off consumer debt, setting up an emergency savings fund, or saving for a big expense, high-yield savings accounts can help you reach your goals.

Having such an account can help fund expenses and debt repayment such as a car loan, bad credit loans, or a home equity loan. When shopping for your best high yield savings options, visit Credible to explore possible solutions that could make you more money.

Here are some debt relief tips to help you pay off high interest debt and simultaneously save money with a high yield savings account to reach your goals faster.


1. Create a strict monthly budget for personal expenses

The national average savings account only earns 0.04% APY, according to the FDIC. High yield accounts pay much more, sometimes up to 10 times more. For example, American Express offers high yield accounts with an APY of 0.40%.

And, although personal savings increased during the pandemic, interest rates have remained low. Ken Tumin, the founder of DepositAccounts.com, said he expects “large-scale gains to be unlikely until at least 2024”.

If you want to move forward, creating and sticking to a strict monthly budget is essential. There are several good reasons for a personal budget:

  • A monthly budget helps you keep an eye on the price so that you can achieve your long term goals.
  • A budget can help you understand where your money is going each month.
  • Personal budgets can help make sure you don’t spend money you don’t have.
  • A budget can help you prepare for retirement and unforeseen emergencies.
  • Tight monthly budgets highlight bad spending habits.
  • A monthly budget can also help you pay off your debts.


2. Do not take on any new debt

If you’re simultaneously trying to save and pay off or pay off some of your existing debt – like student loans, credit card bills, or a car loan – the last thing you need is new debt. Of course, if you don’t have an emergency fund to fall back on and something unexpected happens, you may need to consider a personal loan. Right now, interest rates are low, but any new debt will still have to be repaid, which may leave little room for a high-yield savings account.


3. Reduce spending on non-essentials

If you find yourself buying coffee at a local store seven days a week, you might want to make coffee at home every now and then and put the money you save into a high yield savings account. Essentials like food, gas, and rent are expensive, so it’s a good idea to save where you can. Credible can explain the process of opening a high yield savings account through online banking. Follow these steps to open a high yield online savings account and save more money now.

4. When you make a purchase, pay cash

Before credit cards, everyone paid cash. However, it is much easier to pay with a credit card than it is to part with the green items in your wallet. So, if you commit to paying most things in cash, you might find yourself spending less and putting what you save into a savings account. Find out how you can make more money with high yield savings options through Credible. And, when you go out, leave your credit cards at home.


5. Reduce or remove subscription services

A recent survey by Instamotor found that nearly one in 10, or 9.3% of Millennials between the ages of 18 and 34 admit spending $ 200 or more each month on subscription services. However, many of these services are never used. Instead of spending all your hard-earned money on months of subscriptions, cancel the ones you don’t use and put the money in a high yield account and build up an emergency fund.

The bottom line

Managing debt can take some time even though some debt has grown quickly, but following these tips can help. But when it comes to saving money for rainy days, planning for retirement, saving for home improvement projects, paying off credit card balances or making a down payment. mortgage fund if you are a first-time buyer, don’t leave the table. Maximize your income with high yield savings account options in Credible Market.


Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.

About Wanda Wall

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