When it comes to discussing strategies for saving money, there’s usually one word that can be found in every conversation: interest. Specifically, I’ve found that once people decide to begin saving or investing, they usually focus on how to earn the most interest on their money.
This makes great financial sense, but it can be a tall task when you consider that the average savings account offers a paltry 1% (or less!). However, don’t lose hope because if you’re looking to earn the most interest bang for your buck, there are plenty of options out there to choose from.
Consider the following options for two of the most popular choices of savings vehicles when deciding where to find the best interest rates on your savings:
You can choose from online or brick and mortar bank to house your money if you opt for the traditional savings account route. While there are some arguments for venues such as credit unions or small, hometown banks, I’ve found that the best rates (coupled with ease and convenience of transactions) are found online.
About a year ago, I opted to change my online savings account from HSBC to Ally Bank. This isn’t a paid endorsement of any sort, so I feel comfortable writing about how happy I am with Ally. Not only is my money earning one of the top rates for online savings accounts (0.84 APY), but I love how easy Ally’s interface is and how smooth transactions are.
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If you’re looking to open your own account, you might want to consider looking at Ally’s options. You could also opt to go with a major creditor such as American Express, whose recent introduction of personal savings options carries a 0.85% APY with its online savings account.
Certificates of Deposit
If you have more money to work with and would be able to completely sock it away for a pre-determined amount of time without touching it, you might want to consider opening some CDs. These are perennial favorites of those who value security and stability over risk, so be sure to understand that you won’t be earning buckets of interest on these options either. Also note that the more money you have to put into the CD and the longer you can leave it there, the more you’ll be rewarded through interest earnings.
If you have a sizeable amount to work with ($25K or more), you can break the 1% barrier by opening a 18+ month CD at GE Capital Bank. For those of us with more modest means, you can still come close to 1% with Doral Direct Bank’s offerings that only require a $500 minimum deposit.
What savings vehicles do you take advantage of?