If you have money invested in traditional bank savings accounts, you’re doing yourself a major disservice, because the average APY (Annual Percentage Yield) is currently at 0.23% according to CNET’s sister site Bankrate. In startk contrast, high yield online savings accounts from sites such as CIT Bank offer APY’s over 4% (CIT Bank’s current rate is 4.85% APY for balances of $5,000 or more). I have parked emergency funds and other savings into high yield savings accounts for about 8 years now, and would never consider putting my money into the paltry savings vehicles which traditional banks offer.

Let’s take the APY rates of 0.23% and 4.85% to provide a comparison between traditional savings accounts and high yield onling savings accounts. If $1,000 is invested in an account earning 0.23% APY, the account balance after 12 months will be $1,002.30, while $1,000 invested in an account earning 4.85% APY will have a balance after 12 months of $1,048.54. I’m sure anyone would be happier with having an additional $48 at the end of the year as opposed to $2!

Another investment alternative which actually has slightly higher yields than high yield savings accounts is a certificate of deposit (CD), but the downside is that the funds are locked up for a designated period of time. If you have money which you are willing to set aside into a CD, you might want to consider this investment vehicle. At least with a high yield savings account, you can withdraw funds rather quickly without penalty should the need arise. Some individuals who are accustomed to brick and mortar banks and traditional ATM machines won’t like this option, but I am sure that eventually, physical bank locations will go the way of the dinosaur, so it makes sense to get used to performing transactions online.

The other thing to consider is that the APY at online banks which offer high yield savings options can and does frequently fluctuate. However, accounts at such institutions are FDIC insured for up to $250,000, a comforting fact when trying to figure out how to protect one’s savings in these tumultuous financial times. At the very least, high yield savings accounts provide a means by which one’s money can keep pace with inflation.