Marcus, the online banking division of Goldman Sachs, just crossed the 1% APY threshold on its high yield savings account.
The bank’s Wednesday rate hike follows the Federal Reserve’s decision last week to increase interest rates in its ongoing effort to combat inflation. Marcus previously offered an annual percentage yield (APY) of 0.85%, and this week increased the yield to a full 1%.
Marcus is one of the first online banks we’ve seen raise interest rates following the Fed’s decision, but experts we’ve spoken to expect more banks to follow suit. While its important to note that rising rates also means higher mortgage rates, higher credit card APRs, and a general increase to the cost of borrowing money, you can benefit with higher APYs on savings accounts and CDs. The Fed is also expected to continue raising rates in the coming months, which means savers can benefit from even higher interest rates as 2022 goes on.
Here’s more about why Marcus’ online savings account is one of our favorite high yield accounts available today, and what you can get with a 1% APY on your savings:
How Much Can You Earn with Marcus’ 1% APY?
Marcus new APY offering increases interest for savers by 0.15% — from the previous 0.85% to 1.00%. Here’s what difference that can make for your savings:
Say you have $5,000 in an emergency fund with Marcus. At 1% APY, you could earn $50 over the course of one year, even without making any further contributions. At Marcus’ previous 0.85% APY, you would earn $42.50 in the same period.
An extra $7.50 over an entire year isn’t the greatest amount, but the added interest compounds over time and as you add more money to your savings.
For example, say you not only put the $5,000 in your account, but also contributed $100 each month to your savings. Here’s how your balance would grow over the 12-month period given different APYs, including the national average of 0.08%:
|Marcus Online Savings Account 1.00% APY||Previous Marcus Online Savings Account 0.85% APY||National Average Savings Rate of 0.08%|
|$100 Monthly Contributions + Interest||$1,256.75||$1,248.21||$1,204.52|
|Balance After 12 Months||$6,256.75||$6,248.21||$6,204.52|
In this example, you could earn more than $52 additional interest over the course of a year, just by choosing a 1% interest high yield account over a 0.08% traditional savings account.
Why We Like Marcus by Goldman Sachs
Not only does the Marcus online savings account offer a competitive 1.00% APY, but it also charges no monthly fees and has no minimum deposit or balance requirements. There’s no limit to the number of withdrawals or transfers you can make, and you can set up automatic transfers from another account on a regular basis.
Marcus has an app you can use to manage your account, and offers high yield and no-penalty CD options in addition to its high yield savings account.
We think Marcus is a great savings account option, but there are other high yield savings accounts with higher APYs on the market today. Here are a few more options to consider if you’re in the market for a new savings account:
Just remember, the most important thing you can do to maximize your savings is open an account and start contributing. Look for an account that aligns with your savings goals and has a competitive rate to help you earn a few extra dollars on your balance with no fees. Then, make regular contributions to reach your emergency fund number or other short-term savings goal. Then, you can focus on other financial goals, like saving for retirement or paying down debt.