Let’s start with the basics. What is a High Yield Savings Account (HYSA)?
They usually have higher annual percentage yields (APY) then traditional banks. In other words, the APY determines how much interest you receive on your money. After realizing I get nothing for keeping my savings in a traditional brick and mortar bank, I finally decided to open a HYSA. FYI, HYSA are often online banks, so they do not have physical locations that you can visit. After some quick research, I decided to open an account with Ally (This is not a sponsorship). Check out this article for a list of other HYSA.
When I first opened my Ally account, they had an APY of 1.00% (WOW). With the pandemic, it dropped to .80% and finally to .50%. Don’t be discouraged. It’s normal for it to fluctuate as the economy shifts. I designated a certain amount of my paycheck to be directly deposited into my HYSA. It takes 3 days to withdraw money from my account, so it forces me not to needlessly spend. I also continue to have my “big bank” checking and savings account. After 17 months, I have earned about $14.50.While I may not be jumping for joy when I see those extra dollars, I do get excited that my emergency fund is slowly growing.
Key takeaway: HYSA are good for emergency funds/short term goals (e.g. down payment on house, travel funds). Whether the APY fluctuates or not, you are still gaining more money in comparison to traditional saving accounts. Additionally, I like that there are no maintenance fees.
Another important thing to consider when selecting a HYSA is whether they accept a social security number (SSN) or an individual tax identification number (ITIN). It can be tricky to know this because online some banks state that only U.S. residents or individuals with a social security number (SSN) are eligible to open a HYSA. I called four banks and asked if undocumented individuals with ITIN were able to open an HYSA.
Here is what I got:
Ally: I spoke to two different representatives. One representative confirmed that I could submit my ITIN in the SSN field online. Another stated that they only accepted individuals with a SSN.
Marcus by Goldman Sachs: Yes!
Vio Bank: Nope
Capital One: Yes!
Moral of the story: All of the representatives put me on hold because they were unsure if this was possible, which highlights the lack of awareness these systems have about the undocumented/DACA community. Unfortunately, this may put you in the position to have to educate them. So, call, check, and double check.