That is pretty much the approach people will take when encrypting their game files. Most people don't really bother with encrypting it much. Even a lot of commercial games leave their save files unencrypted - some while even using a human-readable format such as XML. But plenty of games use their own format (usually just binary file I/O since it is fast and often easy to serialize) so it looks encrypted, when in reality its just in a format that makes no sense to you.
Any algorithm would do. I'd personally go for something very fast with no inflation if I were to ever do this. Though if I wanted to obfuscate the save files, I'd prefer to just compress it with a fast, light-weight compression algorithm. That way you get some other benefit instead of just obfuscating the data.
It really isn't worth putting much time or effort into it, and definitely not worth using something that will have a noticeable impact on performance. If people care enough, they will just reverse-engineer the decryption code from your program's binary. Or, even easier, just use a memory editor.
I personally find encrypted save files more annoying than anything. At least when its unencrypted and in a format you can understand (like XML), you can repair your own faulty save files (like if your character gets stuck in a wall).
