Where do high-yield savings accounts fit into the financial plan for the productive Christian household? Are these types of savings accounts a wise investment for leaving an inheritance for our children’s children and stewarding the resources allotted to us? What are the potential risks associated with these accounts, if any? How can these accounts be utilized to meet your family finance goals? Are they only for the wealthy with tons of excess cash? 

These are the questions I hope to answer, or at the very least, offer information to aid you in discerning whether a high-yield savings account is a wise investment choice for your family. 

What is a High-Yield Savings Account? 

A high-yield savings account simply refers to a savings account with an above average interest rate. 

Considering the average traditional savings account interest rate is less than 0.5%, savers do not have much reward for putting their hard-earned cash in a traditional savings account. However, a high-yield savings account offers a simple solution—a higher rate, flexibility, and safety. 

Advantages of High-Yield Savings Accounts 

 High-yield savings accounts offer many benefits, including:

• High(er) interest rates. The most obvious advantage is the higher interest rate, which is typically 10-12x the average savings deposit rate (0.42% average APY according to this source). 
• No additional fees (monthly or annual). Many high-yield savings accounts do not have any fees associated with their accounts. They can do this because the majority are completely online, requiring no physical location to operate. Thus, they do not have the overhead associated with a physical location. 
• Low or no minimum deposit amounts. Many high-yield savings accounts do not require a minimum balance. However, the banks offering the best interest rates typically structure their accounts using a tiered approach. Meaning, to get the highest possible rate, you must maintain a certain balance in the account.
• Safety / security. Most banks are high security, but when you are dealing with a bank that is completely online, you wonder about how safe your money is and what measures they take to prevent fraud, identity theft, etc. The bank we use, CIT Bank, immediately called me after my husband had called to check on something, but he was not listed on the account yet. They wanted to make sure I was aware he was trying to get information. While annoying (we thought we had added him to the account), I was glad they had the layer of security in place! 
• Flexibility. You have access to the money in the account at any time, similar to a traditional savings account. 
• Simple setup.  Most of the time, this type of savings account can be set up in 5-10 minutes online through identity verification steps.
• *FDIC insured. Deposits are backed by the FDIC (insured by the government) up to $250,000 per depositor. 

*I hesitate to add this as a benefit. At this point, you might be thinking how could this be a potential downside? Stick with me here. The more control the government has over the banking system, the more they can force compliance over it. Banks tout being FDIC insured as a benefit, but should not banks be run like a business and forced to insure themselves? I will not go too far off on a tangent, but I do think this is a valid consideration for Christians.

Disadvantages of High-Yield Savings Accounts 

• Variable rates. While they do boast higher interest, they are subject to change at any time. 
• Online only. Most banks that offer high-yield savings accounts do not have a brick-and-mortar location. However, most (if not all) do have online / over the phone customer service reps available. From our experience, we were able to call CIT Bank and get through to a rep after holding for 2-3 minutes. Not bad! 
• Not local. I prefer to keep my business local when possible, so this is a major disadvantage and something we considered before opening an account with a national bank instead of our local bank. 

High-Yield Savings Account vs. the Stock Market   

The main things to consider when determining when to put your money in a high-yield account instead of the stock market include time, risk tolerance, and flexibility.  

If you plan to leave the money alone for 5+ years, investing in the stock market is typically the better option. On the other hand, if you need access to the funds before then, a high-yield savings account might be the better option. 

Additionally, consider your risk tolerance. Many times, this will directly correlate with time. The longer you plan to leave the money alone, the more risk you may be willing to accept. 

For example, let us consider an emergency fund. 

• Time:  unpredictable. You never know when you will have a financial emergency. 
• Risk tolerance:  low. Stability is important, you do not want your emergency fund savings to lose 10% one month and gain 5% the next. 
• Flexibility:  very flexible. You need to be able to access the funds on a day or moment’s notice. 

Considering these stipulations, the stock market would not be a good fit for your emergency fund. Run through these criteria when considering where the proper place for your money is. 

High-Yield Savings Account Ideas 

High-yield savings accounts work well for short-term savings goals.  Examples include: 

• Emergency fund. A good rule of thumb is to always keep 6 months (minimum) of household expenses in a separate, easily accessible savings account. 
• Proceeds from a house sale. Many times, the proceeds from the sale of one home are used soon after the sale for the purchase or building of another. Because high-yield accounts are flexible and funds can be accessed at any time, this makes them a suitable place for large sums of money such as proceeds from the sale of a property. 
• House savings fund. If you are saving for a home and anticipate it will take less than 5 years to save up, a high-yield account is a top choice for your savings. 
• New car fund. The age of your current vehicle(s) will determine if a high-yield account is a good option for your savings. If the vehicle(s) will not need replacement for 5+ years, the market might be a better investment. 
• Christmas savings. Set a savings goal or Christmas and divide the total by 12 months. Starting in January, set aside a twelfth of the amount in a high-yield savings account. 
• Vacation savings. Ditch the credit card rewards and earn a little extra cash for your next trip! 
• Car repairs & home repairs fund. Repairs are unpredictable, so I would personally recommend only keeping savings of this nature in a savings account. 

Most sinking funds have short-term timelines. Because of this, high-yield savings accounts are a great option for your sinking funds savings. If you are not familiar with sinking funds savings accounts, learn more about them here. Try a fun money saving challenge to help you stay focused and motivated towards your money goals! 

How to Utilize High-Yield Savings Accounts as a Christian 

High-yield savings accounts are one tool Christians can utilize to turn a profit on the resources allotted to them by the Lord for the purpose of providing for their own household, being generous to others, personal enjoyment, and blessing future generations. 

A few criteria to consider when making financial decisions include: 

• Does the Bible speak to it (directly or indirectly)? 
• Based on the answer to the first question, is this in violation of any principles or commands outlined in Scripture?  
• Are any conflicts with Scripture issues of conscience rather than obedience?  
• Will this help turn a profit on the resources the Lord has given me (to the best of my knowledge)?  
• Are my motivations and intentions pure?  

Many times Christians believe as long as they aren't using their money for immoral purposes they are being wise financial stewards. However, I'd caution that indifference towards money due to lack of knowledge is not wise. Parking money in a savings account earning 0.1% interest is not sinful, but it might not be a wise option considering it could be earning 5% in a high-yield account.

It's important that we seek out knowledge and biblical principles to follow in all facets of life- including our finances.

After all, there is not a single part of our lives that our faith should not touch.