With the stock market in upheaval, many are turning to other places to keep their money. Cash is becoming somewhat popular again as investors look for safety. The main drawback to the safety that comes with cash, though, is that the rate of return is rather low. In order to make sure that you are getting the most for your money, it is important to shop around for the best savings account interest rate. Just as you shop around for the lowest interest rates on car loans and mortgage loans, it is important to shop around for the best rate on savings account. What you are able to earn in interest is just as important as what you save when you pay interest on a loan.
Consider Local Banks and Credit Unions
It may seem natural to make your first stop a national bank. However, you might be surprised to find that not all national banks offer the best rates on savings accounts. Smaller banks and credit unions may actually offer better rates because they are trying to compete to bring in more business. As a result, your local or regional bank might provide a slightly higher savings account interest rate. Local credit unions are also known for competitive savings rates.
You might also find that these local financial institutions also offer better rates on CDs, and which can provide an alternative to traditional savings accounts that have low returns. CD cash products can provide higher returns for your money, and if you ladder them properly it is often possible to maintain regular access to money without paying hefty penalties.
Open Accounts at Online Banks
In additional to brick and mortar banks, there are also banks that exist almost entirely online. It doesn't matter where you live; you can still take advantage of the special offers at online banks. Many of these banks specialize in high yield savings accounts, providing higher interest rates than what you can get at a brick and mortar bank. You might also consider that some more traditional financial institutions offer special online rates. Search “high yield savings account” or “best savings rates” and you can get can see which banks are offering the best rates for savings accounts. There are those accounts that will even give you a cash bonus when you open a savings account. This can be a good way to maximize your savings, since free cash is free cash that can help you earn even more in interest.
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Considerations When Opening a Savings Account
It is important to careful consider any strings that might be attached to your savings account. Many cash bonuses require that you keep the money in the account for a minimal amount of time. Other savings accounts might have minimum balances that you must maintain to get the best rates, or restrict the number of withdrawals and transfers you can make in a month. You may also be required to open another account, such as a checking account, and link that account to your high yield savings account. There may not be fees and restrictions on the savings account, but you should read the fine print on the linked account; you may find that the required account costs more than what you make on your high yield savings!
Alternatives to Savings Accounts
If the best savings account rates are still not what you are looking for, there are alternatives. Bonds and other financial products and investments that are considered somewhat low risk may be able to provide a higher rate of return with a reasonably low degree of risk. However, it is important to note that not all savings account alternatives are FDIC insured, and you run the risk of loss.
*CD's are FDIC Insured and offer a fixed rate of return if held to maturity. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values and yields will decline as interest rates rise and bonds are subject to availability and change in price.
This is a guest post Miranda Marquit is a journalistically trained freelance writer and professional blogger working from home. She is a contributor for Mainstreet.com, Personal Dividends and several other sites. Miranda is not affiliated or endorsed by LPL Financial. The opinions voiced in this material are for general information and are not intended to provide specific advice and/or recommendations for any individual.