What are savings interest rates?
These are payments made by the bank to you for leaving your money in the bank. By depositing your money in the bank, your bank utilizes a portion of it in its loan operations where it subsequently earns through interest and loan charges. In effect, the income they receive trickles down to you, their source of money. This savings interest rate is actually an effective incentive system. Why so? If you save more money in your bank account through your deposits and savings, you end up receiving a higher return on the savings interest rate than other people would.
Thinking about using a savings account to keep your income accruing? While saving money is always a good idea, there are even better ways to do it than leaving your money in your local bank. One way is to use a high interest savings account.
It’s always prudent to save for a rainy day, and many people with spare cash available prefer the security of placing it in a savings account to the more risky but potentially more profitable choice of other investments such as the stock market. Choosing a savings account would at first glance seem to be as simple as going for the one with the highest interest rate, but there are several other factors to take into account too.
But what is the difference between a high interest savings account and your standard local bank savings account?
How A High Interest Bank Can Help You Save More
High-interest savings accounts are similar to the standard bank account with a few big contrasts. For example, high interest savings accounts offer you a higher interest rate and you’ll usually see them only offered by online banks. This is because these banks don’t carry the high overhead that traditional brick-and-mortar banks do. Additionally, your savings is typically protected up to $250,000 since they are FDIC-insured.
More Interest Leads to More Money
Does your local brick-and-mortar bank offer a savings interest rate of just 0.01? If so, you could be spending years trying to accrue a healthy interest rate. With a high-interest rate, however, you could enjoy an interest rate of 1.8 right out the gate. This means you enjoy about 180 percent more interest than the traditional bank savings account.
Seems like an easy choice.
Maintaining Balance in Your Bank Account
This means that even if you make deductions in your account, the bank requires you to save a bare minimum in order to continue enjoying their services. And yes, that translates to a forced saving on your part.
When it comes to financial management, even business professionals reach a consensus as to what is the most effective, reliable, and secure means to manage your money, and that is through the bank. Your bank is an effective means to manage your bills payments, keep track of your transactions, receive your income and whatever extraneous cash inflow, and help you save effectively.
They Offer Greater Flexibility
Another benefit of using a high-interest savings account is flexibility. The good news with these savings accounts is they typically don’t charge you for withdrawing your money. Most give you up to six withdrawals in a specific period. And, you can easily open a bank account online. Transferring money is equally as easy.
Think a high-interest yield savings account is right for you? Then don’t wait to get started. Start by doing a bit of research to see which accounts are right for your income and savings goals. Get started and begin building your savings.
And finally, high interest savings accounts are attractive because they are extremely liquid. You don’t have to tie up your money for a certain period of time, nor do you have to fill out extensive paperwork in order to make a withdrawal. You can get at the funds for any reason at a moment’s notice without having to pay any penalties or fees. That’s how it should be because it is your money after all, but that’s usually not how it works in the financial world. You like the idea of easy access because you never know what kind of budgetary emergencies will strike before payday.