Shortly after I last discussed my high-yield savings accounts, interest rates increased again and haven’t showed any signs of slowing! On October 6, 2022, LendingClub increased my annual percentage yield (APY) to 2.85%; later that month on October 26 it reached 3.12%; and by the new year, we broke 4%! As of mid-March 2023, the APY is 4.25%—12 times the national average, according to LendingClub. For perspective, LendingClub was offering a 0.65% interest rate back in March 2022 when I opened these accounts.
My SmartyPig high-yield savings account is not getting as much love, but the interest rate is holding steady at 3.50%. When I opened my SmartyPig account, the interest rate was only 0.70% on my savings. I started a new goal with SmartyPig to have $2,000 ready to invest in my Schwab brokerage account by June 30 to correspond with my next portfolio review. Unfortunately, my SmartyPig goal didn’t come with a higher yield as it did the first time I set this goal back in the fall.
In total, I’ve made over $175 across these two high-yield savings accounts in the last year. Meanwhile, my investments have lost money since March 2022. When going through my transaction history to see how much I made on my savings, I saw the huge differences in interest payments that were a result of not only the increasing yield but also the compounding interest I’m making on my savings. The interest I’m being paid increases because there’s more money in my account to make interest on (like magic!).
Back in October 2022, I calculated my net worth for the first time. Since then, I performed a net worth checkup on a quarterly basis. My net worth has gone up by roughly $2,000 each quarter, which is directly attributed to how much I’ve been putting away in savings. If I wasn’t saving on a regular basis, and specifically if I didn’t have these high-yield savings accounts to make the most of my money, I wouldn’t have made as much progress on increasing my net worth.
Before writing this, I moved the $580 I have allotted for monthly savings into my regular bank savings account. Now that I can actually see the difference my savings are making to my overall wealth, I’m feeling more motivated to save. My goal isn’t to make the most money I can, but to be disciplined with the money I already have. As the many financial voices I have in my head keep telling me: Pay yourself first! It pays off.