As the name suggests, a savings account is a bank account that allows you to save your money in a secure place while earning some interest monthly or quarterly. This type of bank account usually requires little or no minimum balance. With regards to choosing a bank to keep your hard-earned money, you will never run out of choices. But in this particular post, I will be talking about the American Express Savings Account. And yes, AMEX is not just a credit card company!
A personal savings account lets you put money aside, where you are less likely to spend it all. Have you heard of an emergency fund and paying yourself first concept? Sadly, saving money is a trait alien to a lot of Americans. Notwithstanding, a savings culture is one of the pillars of financial success.
Again, putting your hard-earned cash in a savings account is one of the safest places you can keep your money. It’s insured (up to $100,000 per depositor) through the Federal Deposit Insurance Corporation (FDIC). What this means is that you do not lose your money even when the Bank goes under – which is quite rare these days.
Another cool thing about personal savings accounts is that they pay you a compounded interest. That is, the bank is paying interest on the interest they paid you!
Let’s Take a Closer Look at What The American Express Personal Savings is All About:
When we start talking about American Express, most of us will probably assume that we’re talking about the AMEX credit card or maybe their travel-related services.
I for one did not know that they also offer a personal savings account and I’ve been a cardholder for more than a decade.
If you own an American Express credit card and have been paying your bills online, you need to know that the Personal Savings account is not related to your credit account. You will have to maintain separate login information for both accounts, but you can use your savings account to pay your credit card bills.
American Express is a leading global financial services provider with a presence in over 40 countries. Prominent among their rich and diverse portfolio of products and services is the American Express Personal Saving Account suite.
The American Express Personal Savings Account comes in two variants:
- The High Yield Savings Account and
- The Certificate of Deposit.
The AMEX High Yield Savings Account
According to the FDIC, the average bank savings account earns an annual interest of 0.06%. This is hardly enough to encourage you to work your butt off, develop iron-clad discipline, and stash away your money in a bank account.
However, do not lose hope. The American Express High Yield Savings Account offers a much better rate. At 1.15% annual percentage yield (APY), it’s almost 20 times the average. Want to know the best part? The account doesn’t charge any fees and requires no minimum deposit to open. All you’ll need are your personal information which is collected online.
American Express Personal Savings Features
| APY (%) | 1.15% Variable |
|---|---|
| Minimum Account Balance | $0 |
| Minimum Deposit Amount | $10 |
| Annual Fee | $0 |
| Permitted Monthly Withdrawals | 6 |
| Mobile App? | No |
| FDIC Insured? | Yes |
| Transfer Time | Deposits become available in five business days. Transfers from savings to a checking account will take one to three business days. |
An American Express® High Yield Personal Savings account offers you a variable APY of 1.15%. This is currently one of the best rates possible on a savings account.
The account is affordable to open – you’re not charged a monthly fee, and you don’t have to make a minimum deposit. But, you must fund your account within 60 days of applying. The FDIC insures your deposits fully.
It calculates using compounding interest on your deposit at a variable APY of 1.15% and the interest earned drops into your account monthly. Variable here means that they can change the interest rate at any point without recourse or notice to you.
The account opening process is online and straightforward. Once the account is opened, you must fund it within 60 days either by direct transfer from another account, direct deposit, or by paying in a check.
Other notable features of the High Yield Savings Account include:
- High-interest rate: At 1.15% variable APY, this is way better than what traditional banks offer for their savings account. While it’s not quite the best rate available for an online savings account, it’s undoubtedly a darned good offer.
- Automated savings: This is a great feature. You can set-up a standing order to transfer funds from your other accounts periodically. To further make it difficult for you to blow your savings, you have the option of having a portion of your paycheck credited to the savings account directly
- No Debit card: The High Yield Savings Account does not issue you an ATM card. While this might discourage you from spending all your savings on mindless purchases, it could be inconvenienced when you need some cash in a hurry. You’ll have to transfer from your online High Yield Savings Account to another checking account which they say will take 1 to 3 working days to become available in your checking account.
- Encourages you to save: This account doesn’t offer you a debit card or other means to access cash directly. Therefore, you’ll most likely reconsider when faced with the task of having to first transfer from the account to another that has a linked debit card. This inconvenience makes it more challenging to spend from your savings.
- Variable interest rate: The excellent annual yield American Express is offering can be changed by them at any time for whatever reason. So, a certificate of deposit may suit you more if you prefer a fixed rate of return.
- Withdrawal Limitations: The Federal Reserve Board regulates withdrawals for high yield savings accounts to a maximum of six times per statement cycle. That is not to say you can’t withdraw more than six times, but any withdrawal over this limit attracts penal charges.
- Easily links with your other bank accounts: You can link up to three of your current bank accounts which makes moving money from these bank accounts to your American Express High Yield Savings account a breeze. You can call their number or you can initiate the transfer online, and funds transfers are usually available 24/7.
The AMEX CD (Certificate of Deposits)
American Express Personal Savings Accounts also include a Certificate of Deposits or CDs. A certificate of Deposit (CD) is a type of savings account with a fixed tenure and interest rate. That is to say, you cannot have access to the deposited funds until the maturity date, or you forfeit a percentage of the earned interest.
The AMEX CDs are ideal for those who want to start saving with a little money. It does not require you to provide a minimum deposit amount. You can start with any amount you have to begin earning interest.
But there’s a disadvantage. You won’t earn as much interest on your deposits when compared to other online banks with high minimum deposits.
The CD offered by American Express has tenors from 6 months to 5 years. The earned interest is compounded and credited monthly until it matures. You can request that the interest is sent to your account monthly, or sent to your via check monthly, quarterly, or annually. If you must withdraw part or all of the principal, you will attract an early withdrawal penalty. The penalties vary according to the terms of your CD:
- For CDs of less than 12 months, you’ll forfeit 90 days worth of interest on the withdrawn amount.
- For CDs of 12 months, but less than 48 months, 270 days interest on the withdrawn amount.
- For CDs of 48 months, 365 days interest on the withdrawn amount.
- For CDs of 60 months, 540 days interest on the withdrawn amount.
American Express will alert you by email or mail that your CD will mature in ten days. You’ll have to notify them if you do not want the CD renewed or they will automatically renew it with the initial terms (except it changes).
AMEX Bank CD Rates
| Term | APY |
|---|---|
| 6 months | 0.30% |
| 12 months | 0.40% |
| 18 months | 0.50% |
| 24 months | 0.70% |
| 36 months | 0.80% |
| 48 months | 0.90% |
| 60 months | 1.10% |
AMEX High Yield Savings vs AMEX CD
The main difference between the two is their interest rates. With AMEX High Yield Savings, the interest rates are variable which simply means that it can change anytime, whereas the AMEX CD rates are fixed. You can also make a deposit anytime and six withdrawals in a statement with the AMEX savings account.
Conclusion
The American Express Personal Savings is a good option for anyone interested in making their savings work for them. The interest rate and other features are comparable to other online banks and even better in some cases. It stands out because they do not require a minimum deposit for account opening, unlike others. If you are a small saver, there are no better offers out there.
The American Express Savings (High Yield) Account is definitely one the best out there.
With regards to the AMEX CD (Certificate of Deposits), there are better rates out there especially in the 6 and 12-month buckets.
