Is your money in the right savings account? Here’s how to know
Finding the best home for your money is important.
- Savings accounts protect your main deposits and give you easy access to your money.
- If you’ve had the same account for a long time, it might be worth seeing what other options are available.
Savings accounts are a great place to store money you’ve set aside for emergencies. Why is it? The deposits you make to your account cannot lose value, whereas when you invest in a brokerage account you run the risk of your account balance decreasing by a day, a week or a month to month.
Not only are your main deposits guaranteed in a savings account (up to $250,000 per depositor), but you can also access this money at any time. Want to withdraw $1,000 to go on vacation? It’s up to you. Need $2,000 to pay an in-home repair technician? This money could be in your hands the same day.
But if you’ve had the same savings account for a while, it might be a good idea to explore other options. You never know if there’s a better place to put your money.
Is your savings account the most generous on the market?
For many years, savings accounts paid such low interest that it was almost irrelevant whether or not you were getting the best rate. But these days, savings accounts are starting to pay a lot more interest than before.
If you’ve been following the news, you may have read that the Federal Reserve has been aggressively raising interest rates in an effort to slow the pace of inflation and provide consumers with relief they need. much needed. The downside is that borrowing is already getting more expensive. Consumers looking to take out car loans, mortgages or personal loans in the coming months could easily find themselves with higher borrowing rates due to the actions of the Fed.
But the benefit of the Fed’s rate hike is that savings accounts and certificates of deposit now pay more interest. It is therefore important to take advantage of higher rates by finding a savings account that will pay you more generously.
In fact, it is simple to determine if it is profitable to move your money. If your bank is paying 1.1% interest on your savings, but another bank is paying 1.6%, it may be a good idea to switch. After all, if you want to keep money in savings, you might as well earn as much interest as possible.
These days, it is particularly advantageous to look at the interest rates that banks pay online. Since online banks do not have the same operating costs and overheads as physical banks, they are often able to offer consumers higher interest rates on their savings.
Don’t be afraid to change
Change can be difficult. If you have been with the same bank for a long time, you may be hesitant to transfer your money. But if you’re looking at a much higher interest rate elsewhere, it’s worth making this switch.
Another option is to keep a small amount of money in your current bank, but transfer most of your savings to another bank to take advantage of higher interest rates. As it stands, the interest paid to you on a savings account may pale in comparison to the return you could generate by investing in a brokerage account. But you need the security of a savings account for your emergency money. That doesn’t mean, however, that you shouldn’t do what you can to generate as much interest as possible.
These savings accounts are FDIC insured and could earn you up to 19x your bank
Many people miss out on guaranteed returns because their money languishes in a big bank savings account earning virtually no interest. Our choices of best online savings accounts can earn you more than 19 times the national average savings account rate. Click here to check out the top picks that landed a spot on our shortlist of the best savings accounts for 2022.