Tips to Maximize Your Savings Potential, Even With Low Interest Rates

Tips to Maximize Your Savings Potential, Even With Low Interest Rates

Guest Post By Patty Moore from Working Mother Life

Visit her blog for more information on how to save money and balance a budget for your family, as well as more child-centric financial information.


Most banks offer super low interest rates on savings accounts, which can be a pain for those trying to save for retirement. According to Federal Deposit Insurance Corporation (FDIC), average savings accounts only pay out around 0.06 percent APY, since May of 2013.


While it’s easier to use the same bank you use for checking as your savings account, it’s possible there are much better options online. Online savings accounts actually have rates up to around 1.05 percent. The only real issue is that there’s no physical service so you would need to speak with a person digitally to manage the account.


Setting Up an Online Savings Account


While online banks do not have physical locations, this means they also can save money when compared to traditional brick-and-mortar operations. These online companies pass the savings on to the customer with higher rates on savings accounts.


Since online savings accounts pay around 1 percent or more, they actually give back about 17 times more than the national average for physical banks. Among the top high-yield, online accounts, the following two stand out:


CIT Bank Premier High Yield Savings


With an APY rate of 1.30 percent on accounts of $100,000 or less, CIT Bank is one of the most impressive online accounts today. For those who want to toss in over $100,000, the amount only drops to 1.25 percent, which still crushes the national average.


In addition, there are no fees for the bank account and the minimal opening deposit is only $100 to get you started. There’s also a $100 bonus for those who maintain a $15,000 balance for the first three months.


Synchrony High Yield Savings


With an APY of 1.20 percent, Synchrony offers amazing savings and even has an ATM card.  There’s no monthly fee or minimum balance and there are other perks like car rentals, ATM reimbursements, and hotel discounts.


The original bank does have a branch in Bridgewater, New Jersey, but otherwise, the business is conducted online or by phone. This is a great option for those who want a great interest rate and a rewards program.


Using a Certificate of Deposit


A CD, which is also known as a certificate of deposit, is a type of savings tool that offers a higher return than standard savings accounts. There’s also no risk involved and CDs don’t require monthly fees. The only real downfall is that some CDs require you to commit to five years or more to gain real interest and avoid fees.


A CD is basically a timed deposit. With a CD, you essentially agree to keep your money in the account for a set period of time. Some terms only last a few days, while others last around ten years. Generally speaking, the longer the term, the higher the interest rate. These rates generally exist between 0.50 percent and 1 percent.


Some CDs include a variable rate CD, low/no-penalty for early withdrawal, callable CD, Jumbo CD, and IRA CD, where each has different pros and cons.


Creating a Money Market Account


In addition to the options above, there’s also a money market account. The interest rate is also higher than a standard savings account, but it requires a higher minimum balance to start.


Basically, an MMA is an option for those looking to save a large chunk of money all at once, rather than adding to an account overtime. An MMA is not like a money market fund, which means it won’t lose money if the market fails. An MMA is backed by the Federal Deposit Insurance Corporation and the National Credit Union Administration (up to $250,000 per depositor).


This option is best if you want the safety of a bank or credit union, and would like a higher interest rate, quick access, and check-writing abilities.


Where to Start


Overall, there are various options to choose from when deciding how to maximize your savings account. Since national banks only offer around 0.06 percent, nearly every online option offers around 17 times more just for using their services.


Some of the top choices include CIT Bank Premier High Yield Savings and the

Synchrony High Yield Savings, among others. Other options include using a CD or an MMA, but there are pros and cons to each system.


Patty Moore from Working Mother Life  has even more financial family wisdom on her blog!


Depending on your ability to save money and whether or not you will need to liquefy funds will depend on which option may be best for you. Above all, the key is to get started and create a plan of action for lifelong savings.

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