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Earning more money on your savings has finally become a lot easier — if you choose the right bank!
Here’s a look at what Clark had to say about interest rates and savings back in 2012:
As the Fed dials back on the manipulation of interest rates in the upcoming years, you’ll see that unequivocally, these online banks and credit unions will continue to emerge as the best, smartest place to earn the best interest rate on your savings.
And that time has come.
Earning more on your savings
After the Federal Reserve announced the year’s second interest rate hike in June — raising the benchmark interest rate by 0.25% to a range of 1% to 1.25% — online banks began increasing interest rates on savings accounts.
“The returns paid on savings and CDs are a key point of competition among online banks and recent Fed interest rate increases have raised the bar,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “There is real pressure to remain competitive if these banks want to retain the deposits they have and hope to bring in more.”
And that competition has created a great opportunity for savers.
At an online bank, you can currently earn about 100x more on your savings compared to the big, traditional banks — which currently offer only about 0.01% interest on savings accounts.
RELATED: Pros & cons of online banking
According to Bankrate, here are just a few of the highest rates available on accounts that don’t require a minimum deposit:
- Sallie Mae: 1.55%
- Synchrony Bank: 1.75%
- American Express National Bank: 1.65%
You can see all current savings rates at Bankrate.com.
Choosing the best bank for your savings
As banks continue this competitive trend, more and more of them will likely begin to offer higher interest rates on savings.
So how do you choose?
In a “rising rate environment,” moving your short-term savings to a high-yield account can be very beneficial. However, you don’t want to make a decision based solely on the interest rate. According to Bankrate, you need to consider all of the terms and conditions associated with the account to make sure it’s the best fit for you and your personal needs.
Plus, you need to be saving on a consistent basis to really take advantage of the higher interest rate.
Having multiple savings accounts is also an option. Rather than bouncing around looking for the best rate, you can keep savings in different accounts at different banks — you just need to be able to keep things organized and come up with the best system that works for you.