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In the last few months, savings have been watching their accounts of their account constantly declining in response to reducing the interest rates of federal reserves.
Currently, the national average rate for a savings account is 0.41%, according to FDIC. A year ago, this figure was 0.47%, although some banks and credit units offer rates more than 10 times higher.
Because rates continue downwards, many savers reconsider their savings accounts and weigh their capabilities.
Read more: 15 savings accounts with interest rates of 4% apy and more
Reddit user Justdowntheblock asked the following question:
The original poster is correct – both accounts look similar on the surface, with the main difference in interest rate. American Express offers 3.7% APY, while Wealthfront offers 4% APY (with the ability to run that rate at 4.5% for three months by sending customers).
One user, Raven21x, is a current customer Wealthfront and would recommend the account. In addition to the larger rate, Wealthfront also provides FDIC insurance outside the typical $ 250,000. “They use a program to move with multiple banks for FDIC coverage of up to $ 8 million per person/entity,” they explained.
However, as Redditor Emporgeoicement1387 pointed out, the higher rate that Wealthfront offers to change changes. “That 4% on Wealthfront may or may not remain 4% because rates change, especially when there are reduction of Fed rates. If the rates are reduced, they can lower my apy quickly, “they wrote.
On the surface it seems that the savings account of Wealthfront has an advantage over Amex. But there is a big difference between these two accounts that these threads do not deal with.
Wealthfront really offers a higher interest rate from American Express to Saldo Savings. However, although American Express offers standard a high -yield savings account (HYSA), it is important to note that the savings option Wealthfront is a cash management account, not a savings account.
AND Cash Management Account It combines certain features of checking and savings, and is available through brokerage and investment companies, not banks or credit unions.
Both Wealthfront and Amex Hysa wallet are a FDIC, but in some different ways. Brokers or companies offering cash management accounts do not provide your money on their own. Instead, they transfer your balance to one or more FDIC’s insured partners bank. This often allows cash management accounts to offer more than a typical FDIC insurance worth $ 250,000 to each customer.
In the Wealthfront case, his cash management account is provided up to $ 8 million via partner banks. Up to $ 250,000 by USD by the ownership category on the other hand.
No institution charges a monthly fee for these accounts or does not set the minimum sald requirements. Wealthfront boasts higher APy, but the rates on both these accounts can change at any time and should not be the only decisive factor when choosing one over the other.
Read our complete review of the American Express National Bank
The high interest rate is important to increase the state of your savings account over time, but these rates are not set in stone and should not be the only reason why you choose a particular account.
When assessing any savings account, consider fees, minimal and maximum requirements for balance, internet banking and mobile capabilities, reputation of institutions and limitations of federal insurance coverage.
Knowing which factors are most important to you, you can help you narrow your choice and land on your account that you will be satisfied with, even if the rates fall.
If you are not sure where to start, see our ranking 10 of the best savings accounts with high yield For this month.
