As a small business owner, there are 3 reasons I'm keeping my Amex high-yield savings account even though interest ratings have dropped dramatically

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  • I've been growing my bakery business for the last few years and haven't been able to save much money.
  • At the beginning of 2020, I was finally in a position to save, so I opened a high-yield savings account with Amex (Member FDIC).
  • But six months on, my interest rate is down a full 1%. Still, I'm keeping the account since I'm earning more than I would in a typical bank savings account and my cash is accessible if I need it.
  • See Business Insider's picks for the best high-yield savings accounts »

As most entrepreneurs will tell you, saving money is almost impossible while you are building a business from the ground up. You tend to need any extra funds for business expenses, to keep afloat as well as grow and hire employees and purchase more inventory.

Over the past few years, instead of saving, I've been investing any extra funds into building my bakery, The Cookie Cups. This year, however, I made it my goal to put some of my hard-earned money in the bank for the long term. I also wanted to make sure it would grow, since typical savings accounts only earn about 0.01%.

Searching for the right high-yield savings account

I started my Google search with something like "best high-yield savings accounts," and it took me to an article with a great list of options. I decided to open an account with American Express. I already have an Amex credit card, so I felt a sense of trust in the company. And at the time, Amex was listed in the top three with an interest rate of about 1.89%, compounded daily.

At first, I had very high expectations for my 2020 savings — I figured this account would allow me to make a few thousand dollars just by letting my savings sit there. In July, however, I received notice that the interest rate was dropping to 0.99% because of the Fed's pandemic-related interest rate cut, and a few weeks ago there was another email with another interest rate of 0.8%, which is almost 1% less than when I opened this account just under six months ago. 

American Express® Personal Savings

American Express American Express® Personal Savings

APY
Min Deposit
Featured Reward
  • A five pointed star
  • A five pointed star
  • A five pointed star
  • A five pointed star
  • 3.75 out of 5 Stars
    Editor's Rating
    APY

    0.80% APY

    Min Deposit

    $0

    Featured Reward

    NoneA five pointed star

  • A five pointed star
  • A five pointed star
  • A five pointed star
  • A five pointed star
  • 3.75 out of 5 Stars
    Editor's Rating
  • Details
  • Pros & Cons
    • FDIC Insured
    • 24/7 account access
    • Earns interest daily, and posts to account monthly
    Pros
    • Competitive APY
    • No monthly service fees
    • No opening deposit or minimum account balance
    • 24/7 phone support
    • No excess transaction fee
    Cons
    • No mobile app for banking customers
    • You must make a deposit within the first 60 days
    • No live online chat

    Why I'm keeping my account open despite interest rates dropping

    For a second, I debated pulling my funds to put them somewhere where I might earn more interest over time, like a retirement account or even a CD, but those accounts tend to require that you keep the funds in them for a long period of time. As an entrepreneur with a growing business, I have found that surprises happen (especially now with COVID-19) and there may be times when I need quick funds to help with payroll or other business expenses that we'd normally be able to cover.

    I decided to keep my Amex savings account for three reasons:

    1. Liquidity: My funds will be available if I need them, even if they are earning less than they might in another account.
    2. Higher interest rate than traditional savings: Even though my interest rate has dropped, I'm still earning much more than I would in a typical bank savings account.
    3. Compound interest: Compound interest allows me to make money on my earned interest. A higher interest rate means more cash earned.

    My high-yield savings account also allows me to make a certain number of withdrawals without penalty while keeping my funds liquid in case of emergencies, so I'm holding onto it. 

    If you're thinking of opening a savings account this year, I would definitely consider opening something with a high yield so that you are making the most of your funds with the ability to access cash quickly if needed. 

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