Losing a job can be stressful but getting a severance check can soften the blow. And there are ways to use that money to improve your financial footing.
First things first, if you’re carrying high-interest debt, that lump sum could be a chance to wipe out balances that have been draining your bank account. If your debt is manageable, your severance might be better off parked in a safe place while you figure out your next move. That could mean building or beefing up your emergency fund, especially if you’re unsure how long your job search will take.
Here’s a look at some of the best places to stash your severance so it’s safe, accessible and earning interest.
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For high APY
The EverBank Performance Savings account currently offers one of the highest APYs we’ve seen among high-yield savings accounts. These rates change frequently but EverBank’s has ranked among the more competitive options. That’s especially notable as rates have come down following the Federal Reserve’s rate cuts in September. Parking your severance in an account like this allows your money to earn interest, which can be helpful if you want your cash to grow while you figure out your next move.
EverBank Performance℠ Savings
Annual Percentage Yield (APY)
Minimum balance
Monthly fee
Maximum transactions
You may conduct up to 20 external transfers per day, subject to a maximum of 10 transfers that pull deposit funds from a linked external account into your accounts at EverBank and a maximum of 10 transfers that send deposit funds from your accounts at EverBank to a linked external account, and up to 50 total external transfers per month.
Excessive transactions fee
Overdraft fees
Offer checking account?
Offer ATM card?
Pros
- Strong APY
- No minimum balance required
- No monthly fees
- Free ATM card and no ATM fees
Cons
- Limited physical branch locations
For easy liquidity
High-yield savings accounts are generally strong in terms of liquidity but most don’t allow direct spending, so you typically need to transfer funds to your primary checking account before spending them. Depending on the bank, transfers can take a few business days.
One option that adds flexibility is the UFB Portfolio Savings account, which comes with a free ATM card. While UFB doesn’t have physical branches, it offers access to more than 90,000 fee-free ATMs nationwide through networks like Allpoint, MoneyPass and Chase. That can make it easier to access your cash if you need it quickly.
- Strong APY on savings balances
- No minimum deposit or balance required for savings
- No monthly fees
- Free ATM card with unlimited withdrawals
- Free transfers between direct deposit accounts
- Online and SMS banking available
- Mobile check deposits
- Security features include fraud and anti-virus protection, SSL encryption for connection, automatic logouts after inactivity
- Potential overdraft fee, though overdraft protection is offered
- Certain types of withdrawals and transfers may be limited
- $10 excessive transaction fee per transaction over 6/month
- No physical branch locations
Money market accounts can offer similar APYs to high-yield savings accounts but with added checking-style features, such as check-writing privileges and debit card access. For example, the EverBank Performance Money Market account includes checks and a debit or ATM card, and it reimburses out-of-network ATM fees. That combination can appeal to savers who want competitive yields with more day-to-day access.
EverBank Performance℠ Savings
Annual Percentage Yield (APY)
Minimum balance
Monthly fee
Maximum transactions
You may conduct up to 20 external transfers per day, subject to a maximum of 10 transfers that pull deposit funds from a linked external account into your accounts at EverBank and a maximum of 10 transfers that send deposit funds from your accounts at EverBank to a linked external account, and up to 50 total external transfers per month.
Excessive transactions fee
Overdraft fees
Offer checking account?
Offer ATM card?
Pros
- Strong APY
- No minimum balance required
- No monthly fees
- Free ATM card and no ATM fees
Cons
- Limited physical branch locations
For no fees
If you want an account with minimal costs and no hoops to jump through, the Marcus by Goldman Sachs High Yield Online Savings account stands out. It charges no monthly fees, has no minimum deposit requirement and no minimum balance requirement. The account is simple to use and offers easy mobile access, making it a straightforward place to deposit your severance and let it grow without added conditions.
Marcus by Goldman Sachs High Yield Online Savings
Goldman Sachs Bank USA is a Member FDIC.
Annual Percentage Yield (APY)
Minimum balance
Monthly fee
Maximum transactions
At this time, there is no limit to the number of withdrawals or transfers you can make from your online savings account
Excessive transactions fee
Overdraft fee
Offer checking account?
Offer ATM card?
Pros
- Strong APY
- No minimum balance or deposit
- No monthly fees
- No limit on withdrawals or transfers
- Easy-to-use mobile banking app
- Offers no-fee personal loans
Cons
- Higher APYs offered elsewhere
- No option to add a checking account
- No ATM access
The Ally Bank Money Market Account is another low-cost option with a competitive APY and daily compounding. There are no balance tiers, no monthly maintenance fees and no minimum balance requirement. Customers also get fee-free access to more than 75,000 ATMs through the Allpoint and MoneyPass networks, plus up to $10 per statement cycle in out-of-network ATM fee reimbursements.
Ally Bank® Money Market Account
Ally Bank® is a Member FDIC.
Annual Percentage Yield (APY)
Minimum balance
Monthly fee
Offer checks?
Offer debit/ATM card?
Pros
- Above-average APY
- No minimum balance
- No monthly fee
- Access to checks and debit/ATM card
- Out-of-network ATM reimbursement up to $10 per month
Cons
- No physical branch locations
For large balances
If your severance check is substantial, you may not want to keep all of it in one place. For emergency savings, experts typically recommend setting aside at least 3 to 6 months’ worth of expenses but you can add more if you prefer.
If your severance exceeds what you need for short-term bills and a healthy emergency cushion, the rest could be invested for longer-term growth. A taxable brokerage account, like those offered by Charles Schwab or Fidelity, is great because it allows you invest in a wide range of assets, including low-cost index funds, ETFs and individual stocks with no annual contribution limits or early withdrawal penalties.
Charles Schwab
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One® Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
Fees
Fees may vary depending on the investment vehicle selected. Schwab One® Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
Bonus
Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One® Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™, Schwab Organization Account and Schwab Trading Powered by Ameritrade™
Investment options
Stocks, bonds, mutual funds, CDs and ETFs
Educational resources
Extensive retirement planning tools
Pros
- $0 minimum deposit for active investing
- No commission fees for stock and ETF trades and no transaction fees for over 4,000 mutual funds
- Offers extensive retirement planning tools
- Users can get on-demand advice from a professional advisor/Schwab expert
- Robo-advisor Schwab Intelligent Portfolios® available as a no-fee automated service option (with Premium version available for a fee)
- Award-winning thinkorswim® trading platforms and all their cutting-edge tools are now available at Schwab.
- 24/7 customer support access by phone or chat
- Charles Schwab offers over 300 brick-and-mortar branches across the U.S. for in-person support
Cons
- Specific transactions may require commission fee
- Robo-advisor Schwab Intelligent Portfolios Premium charges a one-time planning fee of $300, then a $30 per month advisory fee. For that price, you get unlimited 1:1 guidance from a CFP, interactive planning tools, plus a personalized roadmap for reaching your goals
Fidelity Investments
Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go® account, but minimum $10 balance for robo-advisor to start investing
Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go® has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over and this includes access to unlimited 1-on-1 coaching calls from a Fidelity advisor)
Bonus
Investment vehicles
Robo-advisor: Fidelity Go® IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other: Fidelity Investments 529 College Savings; Fidelity HSA®
Investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
Educational resources
Extensive tools and industry-leading, in-depth research from 20-plus independent providers
Pros
- No commission fees for stock, ETF, options trades
- No transaction fees for over 3,400 mutual funds
- Limited-time special offers
- Abundant educational tools and resources
- 24/7 customer service
- Over 100 brick-and-mortar branches across the U.S. for face-to-face support
Cons
- Fidelity Go® has a 0.35% advisory fee per year for balances of $25,000 and over
- Some of Fidelity’s mutual funds require reaching specific thresholds
- Reports of platform outages during heavy trading days
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