High yield savings account question ?

Hi folks, would it be wise to deposit $20,000 to a high yield savings account all at once without any recurring deposits OR 

Deposit a small amount such as $2500 and make recurring deposits that ultimately amount to $20,000. 

Not sure if my calculation is correct, but, the latter seems like a better approach. Any thoughts? Feedback. Thanks. 

8 Answers

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  • 1 month ago

    Consider banking at a credit union. Better than a high yield savings account (aka a Money Market Account - at about .3% interest) go for CD's (certificate of deposits). If you need various amounts at various times "ladder" your money [a 1 yr CD, a 2 yr CD, a 3 yr CD]. You will find rates are depressingly low (but better than a MMA) and the best CD rates do not allow add-ins. Put some (or all) in a MMA account if you need the money within the year. 

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  • 1 month ago

    I would think the first is better because you would be earning more interest.

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  • 1 month ago

    Depending on your bank. 

    Are they doing daily compound interest or monthly? 

    And what are the requirements of the bank? 

    For example, with banks like CIT, to keep their high interest rates (compared to other banks), you have to either have a minimum of I think $25,000 or deposit at least $100 into the account each month. 

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  • 1 month ago

    If you're looking only at this account you will have the most money if you deposit all of the money on the first day. This allows all of the money to accumulate interest for the entire time.

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  • fcas80
    Lv 7
    1 month ago

    If you think interest rates are going up, then make recurring deposits.  If not, deposit it all at once and get the maximum benefit of compounding.

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  • Anonymous
    1 month ago

    Your interest income is based how the the total amount in the account. There is no benefit for doing add on deposits unless you are talking about an add on CD or something like that. And that only helps because you can lock in a prior high rate when at first you did not have the extra money.

    My highest no work savings account pays 1.50%. But I don't use it because it wont update at Mint.  The next highest is 1.35%.

    I use rewards checking accounts for higher rates. But they require jumping thru hoops. But they pay more. I have 4 that pay 3% or more. They have maximums of $15k for 2, $25K for one and $30k for the other.

    Some don't like jumping thru the hoops. I don't mind it. Some think meeting the requirements is cheating.I disagree.

    A prior bank I did used lowered their rate way down so I no longer use them. Unless I earn extra, its not worth the time.

    https://www.depositaccounts.com/checking/reward-ch...

    On $20,000, you stand to earn $25 a month at a 1.50% rate and $50 at a 3% rate.

    The difference or delta is how you determine if its worth your trouble. To me it is. I use tricks to meet the requirements without spending a lot. Others split up transactions at walmart self checkout for $5 at a time.

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  • 1 month ago

    The longer the money is in the account, the more interest you will earn.

    So, you would always be better off putting the entire $20k in at once.

    If you calculated that $2500 per deposit over time would give you more interest, you did something wrong.

    • Jignesh1 month agoReport

      Ah I forgot that idea that interest is based upon principal. 

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  • 1 month ago

    Unless the money doesn't have a papertrail, it doesn't matter.

    If the money doesn't have a papertrail, you should deposit the money over 2 years. 

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