Finding the best home for your money is important.
- Savings accounts protect your initial deposits and give you easy access to your money.
- If you’ve had the same account for a long time, it might be worth looking into other options.
Savings accounts are a great place to keep your money for emergencies. Why is this? You cannot lose the value of the money deposited in your account, while investing in a brokerage account involves the risk of your account balance decreasing from one day, one week or one month to the next.
Not only is your initial deposit into a savings account guaranteed (up to $250,000 per depositor), but you can access that money at any time. Want to withdraw $1,000 to go on vacation? This is your decision. Do you need $2,000 to pay a home repair technician? This money can be in your hands the very same day.
But if you’ve had the same savings account for a long time, it might be a good idea to explore other options. You never know when there might be a better place to put your money.
Is your savings account the most generous?
For many years, savings accounts paid so little interest that it was almost not worth worrying about getting the best rate. But these days, savings accounts are starting to pay much higher interest rates than they used to.
If you’ve been following the news, you may have read that the Federal Reserve is aggressively raising interest rates to slow the pace of inflation and provide some much-needed relief to consumers. The downside to this is that borrowing is already becoming more expensive. Consumers looking to take out auto loans, mortgages or personal loans in the coming months could easily be left with higher lending rates as a result of the Fed’s actions.
But the positive side of the Fed’s rate hike is that savings accounts and certificates of deposit are now paying higher rates. Therefore, it’s important to take advantage of higher interest rates by finding a savings account that pays you more generously.
In fact, figuring out if it’s worth moving your money is easy. If your bank pays 1.1% interest on your savings but another bank pays 1.6%, switching makes sense. Eventually, if you keep the money in savings, you can earn as much interest as possible.
Nowadays, it is particularly worth taking a look at the interest rates that online banks pay. Because online banks’ operating costs and overheads are not the same as brick-and-mortar banks, they can often offer consumers higher interest rates on their savings.
don’t be afraid to change
Change can be difficult. If you’ve been with the same bank for a long time, you may be reluctant to transfer your money. But if you see much higher interest rates elsewhere, it’s worth making the switch.
Another option is to keep a small amount at your current bank but transfer most of your savings to another bank to take advantage of higher interest rates. Whatever the case, the interest paid to you in a savings account may be lower compared to the returns you would receive from investing in a brokerage account. But for your emergency money you need the security of a savings account. However, that doesn’t mean that you shouldn’t do everything you can to garner as much interest as possible.
These savings accounts are FDIC-insured and can earn you up to 19 times more than your bank
Many people miss out on guaranteed returns because their money is deposited in a large bank savings account with no interest. our choice The best online savings accounts You can earn more than 19 times the national average rate on savings accounts. click here Highlighting the best-in-class picks that made our shortlist of the best savings accounts for 2022.