A lot of people are simply content to throw their extra money or emergency cushion into a savings account and leave it there. That’s just fine if you don’t really care about accruing interest, but if you want to earn money back for your savings, make yourself knowledgeable. Before starting up a savings account, start thinking about all the things that affect your money.
The Bank Matters
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The bank you choose makes a huge difference in terms of the interest your account will earn. It’s absolutely vital to choose a bank, credit union, or lending institution with a solid, steady reputation. People do lose money in banks, either because of unsavory financial practices or because they haven’t shopped around and found the best bank for their needs. Before opening a new account or moving a current one, do some research. Comparison shopping for a new bank is just as important as comparison shopping for a car or a new pair of shoes. Ask around and read reviews.
Interest Rates Are Not Steady
If you just put your money in a savings account and assume it will earn a certain, steady amount of interest, think again. Interest rates are not steady. They differ from state to state, bank to bank, and even day-to-day. Dozens of things affect interest rates, including the value of the dollar and the flux of the economy. Keep up on your savings rates by using this saving rates calculator when you get curious. Better yet, make it a monthly affair, just to keep an eye on how much money your account is actually earning.
There Are Several Kinds of Savings Plans
If you assume there’s just one standard savings plan, you’re probably losing money even as you read this. There are savings accounts designed to give you higher interest rates, although there are often restrictions on these types of accounts. For instance, you’ll probably have to deposit higher amounts of money or you may have to bundle with a health or insurance plan. There are also money markets accounts, which work as checking accounts too. If you’re looking to create a financial cushion, this isn’t the best idea—it’s too tempting. IRAs are specialized savings plans, and there are also stock-based accounts.
Sometimes Online Banking Is Better
As you shop around for different banks, make use of that savings rates calculator and expand your search to the Internet. There are more and more online banks available, and many of them have highly comparable interest rates. These banks work solely online, and they’re able to offer you better rates because they don’t have as much overhead as brick-and-mortar banks. If you’d love to never enter another bank or wait in your car to deposit your money, think about taking your funds online. It can really pay off, in terms of earnings and convenience.
The bank you choose is just as important as the money you put into your account. Does your current bank offer you the best interest rates or will you look elsewhere for more money?