| If the current economic downturn has gotten you to reevaluate your finances and you're convinced that now is the time to start saving more...good for you! If you're looking for the highest interest savings account you can find there are a few points you have to keep in mind.
Todays interest rates are at all time lows. The term 'high' can be somewhat misleading, there really is no such thing as a 'high' interest rate, though some banks are better than others. Interest rates will range from about 1.01% up to 3.01% APY.
Interest rates aren't the only factor you should consider before opening your account. At some banks you will be required to keep a minimum balance to qualify for a certain rate, which would greatly reduce access to your money.
Your financial habits have to be taken into consideration when picking out a savings account. For example, are you allowed to draw out money as often as you want without a fee? If you draw money out of your savings frequently and the bank you choose charges you a fee, that could add up very quickly and could really put a dent in your savings account, even if you're earning a fairly high interest rate.
Another thing you need to ask any potential bank is if there is a minimum deposit amount to open the account, and will you need to keep a minimum balance.
If you have a fairly small savings account and the main reason you keep an account is to have access to money in the event of an emergency, than having to maintain a minimum balance could be a problem. If your balance falls below the minimum required by the bank you will be charged some fairly significant fee's.
One thing you should consider is using an online bank which have gotten increasingly popular over the past several years. You can generally earn a higher interest rate since the bank doesn't have all the overhead costs of a brick and mortar location.
The difference in interest rates between online and offline banks has narrowed somewhat in the last several years, but you will still earn more from and online bank so that is an option you should consider.
The bottom line is this: with the economy in such turmoil now is a great time to start a savings account whether you use it to save for a rainy day or just to keep your money safely parked until other investments start to make sense again. Get the biggest bang for your buck by finding the highest interest savings account you can. |