I just got my first real job and am trying to set everything up for the first time (401(k), IRA, savings, etc.).
I read online that something I should prioritize early is an emergency fund (3-6 months worth of expenses). I also read that I should put that in a HYSA.
Currently, I have a checking and savings account at a credit union near me. I want to use a new bank and open a checking and savings account (and get a credit card that I will pay off monthly).
My company has a partnership/deal with Bank of America that gives us access to the Preferred Rewards Gold Tier which has an APY of .02%, but an interest rate booster of 5%.
Is this equivalent or close to a HYSA, or should I prefer a HYSA?
I’ve read online and am still not 100% sure of the difference, but it seems like the interest rate applies only to your contributions and not interest you get? Whereas APY compounds which includes your deposits and monthly interest?
So, for example, if I made an initial deposit of $10,000 into this BOA account at 5% interest – it would be worth $10,500 at the end of the year. Whereas if I put it into a HYSA with an APY of 5% ~$10,511.62 (NerdWallet Savings calculator).
Is that correct?
Also, let’s use the same example above and say I deposit $500/month ($6,000 for the year) into each account. Would the BOA account with 5% interest rate be $16,800 ($16,000 of my contributions + 5% of $16,000)? Whereas the HYSA would be $16,651.05 (savings calculator from NerdWallet)?
TL;DR:
Is BOA Preferred Rewards Gold Tier similar to a HYSA/good enough for me at the moment while I begin my career to build up an emergency fund in?
Is my understanding of APY vs. interest rate in the above examples accurate?
