There’s no question having a savings account is necessary to get your financial house in order. Savings accounts are great for storing your emergency fund, planning for upcoming purchases like travel or special events, and more. But it can be frustrating to earn little interest on your money while it’s sitting in a savings account at a physical bank, which is why many people have turned to online banks where interest rates on savings and checking accounts are typically higher.
Online banks are able to offer higher interest rates on savings and checking accounts because there are less overhead costs than for brick-and-mortar banks. One online savings account option to consider is an American Express Personal Savings High Yield Savings Account.
American Express Personal Savings High Yield Savings Account Overview
The American Express Personal Savings High Yield Savings Account currently offers 0.90% annual percentage yield (APY). However, this interest rate is subject to change without notice, which is pretty typical for most online banks. There is no minimum deposit required to open an account, but the funds must come from an external account under your same name held at a different bank. Your initial deposit must be sent within 60 days of being approved or your account will be automatically closed.
There are no monthly maintenance fees associated with this savings account, and you can link it to more than one financial institution or current bank account to make deposits and withdrawals.
Funds are FDIC insured up to $250,000, the same as money at a physical bank.
Making a Deposit into an American Express Personal Savings High Yield Savings Account
Once your account has been opened and initially funded, you will need to link any other external checking or savings accounts to your American Express Personal Savings account in order to transfer funds electronically. External accounts must belong to you and have the same ownership as your Personal Savings account. After you have entered your account information to link it, you will be sent test deposits of small amounts to verify your information is correct.
Funds transferred electronically are generally available within five business days.
In addition to electronic transfers, you can deposit physical checks by mail. If you write a check from another bank, make it payable to American Express Bank, write your Personal Savings account number on the memo line, and mail it to:
American Express Bank, FSB
P.O. Box 30384
Salt Lake City, UT 84130
If you send a check made payable to you, sign the back and under your signature write “for deposit only in account” followed by your Personal Savings account number. However, it is more secure to send a check made out to American Express Bank. American Express does not accept cash deposits by mail.
The maximum account balance you can have in an American Express Personal Savings account is $5 million.
Withdrawing Funds from an American Express Personal Savings High Yield Savings Account
A Personal Savings account with American Express is not meant to be used for everyday spending and other transactions, and thus does not come with an ATM card, debit card, or checks. The Federal Reserve Board’s Regulation D allows a maximum of six transfers or withdrawals per statement period for savings accounts and money market accounts within any bank.
That said, withdrawing funds electronically is just as easy as depositing them. You can make transfers to your linked external accounts within your account online. Transfers to external accounts can take one to three business days, if the account is already linked to your Personal Savings account.
Keep in mind internal transfers from one American Express Personal Savings High Yield Savings Account to another will count toward the limit of six withdrawals per month.
However, if you call and request an official check by mail, this will not count toward the limit.
Pros and Cons
Overall, there are more pros than cons with this account. No monthly fees and a higher interest rate on savings is a big pro versus keeping your money in a savings account at a brick-and-mortar bank. Also, there is no minimum required to open or maintain an account. Even with a $0 balance, American Express will not close your account unless it has been inactive for over 12 months.
However, one disadvantage to keeping your money in an online savings account is the waiting period it takes to access your money. It can take one to three business days to transfer your money to an external account. This can be an inconvenience if you are facing a financial emergency, which is why it’s a good idea to always keep a buffer in your checking or savings account in your physical bank.
Alternatives to the American Express Personal Savings High Yield Savings Account
If a higher interest rate on your savings is really what you are after, the Ally Bank Online Savings Account could be a better alternative as it currently offers 1.0% APY on balance of all sizes. However, Ally Bank does have some fees you’d have to watch out for, like an excessive transaction fee of $10 per transaction and a $20 fee for outgoing domestic money wires.
Barclays Online Savings Account also currently offers 1.0% APY, and their tools can help you set savings targets to reach your overall financial goals. You can use Remote Deposit to transfer money into your Barclays Online Savings Account from your computer or smartphone. Funds received electronically or by check will be on hold for five business days after they reach your account.
Another alternative to consider is opening up a certificate of deposit (CD) instead of a high-yield savings account. American Express currently offers CDs for 24 months at 1.0% APY or more for longer periods of time. The rate will be fixed when you complete your application, as long as you fund your CD within 30 days and do not withdraw interest before the maturity date. Early withdrawal of interest will hurt your future earnings, and early withdrawal of principle will result in a penalty. This is why CDs are good for investing money for short periods of time but may not be the best emergency fund option.
Who Will Benefit Most from an American Express Personal Savings High Yield Savings Account?
Anyone looking to earn money on their savings will benefit from an American Express Personal Savings High Yield Savings Account. Just remember you are limited to no more than six withdrawals or transfers per statement period, and it can take up to three business days to receive your money in an external account.