Have you ever felt as though the world is conspiring against you when you decide to make a change to improve your life? You vow to lose 20 pounds, and a Dairy Queen opens down the street from your house. You decide you want to be more productive at work, but then March Madness can be streamed for free on your computer.
Well, it can be the same for saving money. When the economy was flying high and the stock market made everyone look like a genius, savings rates were at all-time lows, sometimes even below 0 percent. Unsurprisingly, interest rates on savings accounts were also decent. Now that the recession hit and more people are saving money, guess what: Interest rates are pathetic. One percent here, .5 percent there, 2 percent for a 5-year certificate of deposit, et al.
Basically, when the Fed sets the interest rate soul-crushingly low as they are right now, it’s good for people looking for good rates on mortgages and other loans, but really bad for savers.
For those who are looking to get higher percentages of interest on their savings accounts, here are two sites to check out that constantly update the best rates on savings accounts, checking accounts, CDs, etc.:
- Bankrate.com (http://www.bankrate.com/checking.aspx)
- Money Rates (http://www.money-rates.com/savings.htm)
Personally, I’m pretty conservative when it comes to money and I don’t like the idea of moving my savings around to get a .3 percentage increase in interest here and there. I don’t think it’s worth it, but there’s no harm in trying.
Just moving money around isn’t the only way to try and maximize savings, though. Instead of just conventional savings accounts, consider bank-based money markets and certificates of deposit. While you may not be able to always take money out, that’s not the point of savings, anyway.
Many people like to try and “ladder” CDs and spread their money among shorter-term CDs and longer-term ones in order to get the most money. Here’s a link to an article about it from the credit union I still use for my savings account: https://www.hvfcu.org/savings/certificates#laddering-tool
To be honest, I think laddering is good in theory but only really works if you have beaucoup money to spread around. I believe that the best option would be to diversify your savings, much like you would with stocks and bonds. Have a bank-based savings account, open up a certificate of deposit for money you know you don’t need to touch for a period of time, and contribute to the retirement plan at your job (or an IRA for those who don’t have that option).
Also, another thing to consider is a checking account that offers interest. Very few do without charging you a fee, but smaller regional banks sometimes do it (my old bank in Wallkill used to offer it, for example). That’s another good way to make some extra money.
Very few banks do this, though. A quick way to make a few extra dollars is to only keep enough money in your checking account to pay a couple of month’s worth of bills, and put the rest into a savings account to gain interest until you need to use it. You work hard for your money, and you should expect your money to work hard for you as well.