In an overly commercial world where the vast majority of people focus on ways to acquire more, savings is often pushed aside for the latest electronics, cars and clothes. But this doesn’t have to be your mentality. A cash reserve can take you farther than any material possession, and if you’re ready to reign in spending and make smarter financial decisions, savings banks can help.
American savings banks are financial institutions that primarily accept savings deposits. Maybe you have a checking account with a bank, but need a place to hold money not used for bills and everyday expenses. Not that you need a designated account for savings. In fact, many people take the under mattress, shoebox or coin jar approach. This is definitely convenient and you don’t have to visit the bank. However, saving money isn’t only about deposits. With a savings account, there’s the option to earn interest on your deposits. This grows your cash faster and helps you reach goals sooner.
Finding the best interest rates at American savings banks takes patience. There is no standard interest rate on savings accounts, and because there are different types of savings banks, some institutions can pay higher interest. Going with the first bank you find or randomly choosing a bank is fast, but you might sell yourself short. Why get pennies when you can earn dollars?
Check Online Rates
Local banks are close to your home, and if you have an issue, you can drive five minutes and speak with a banker. This provides a sense of personable service. However, local banks don’t typically offer the best rates on savings accounts. Running a bank branch is costly. There are monthly expenses for the actual location, plus the cost to pay employees who work inside the bank. As a result, many local banks can’t afford to offer high rates on savings accounts. This isn’t the case with online savings banks.
Ally, ING, American Express and CIT are reputable online banks that offer generous rates on savings accounts. High-yield savings accounts with these institutions average 0.85% and higher. Open an account in a matter of minutes, transfer funds into your new savings account and watch your money grow.
Consider a Long-Term CD
Of course, a standard savings account isn’t the only way to earn a higher interest rate. It’s always helpful to keep some cash liquid for emergencies. But if you can afford to lock in your money for a specific number of months or years, consider certificates of deposits.
American savings banks offer CDs as an additional savings vehicle. Investment accounts typically earn higher returns, yet many people don’t want to gamble with the stock market. A certificate of deposit is a safe investment strategy and returns are guaranteed. Invest a specific dollar amount with the bank, and at the end of your CD term, the bank returns your money plus interest. Typical bank CD terms range from six months to five years. Rates vary. However, the more you invest and the longer your CD term, the higher your interest rate.