Benefits of High Interest Savings Account
Benefits of High Interest Savings Account
Opening a high interest savings account offers consumers the opportunity to earn a higher rate of interest on deposited funds. Currently, the average annual percentage yield for traditional savings accounts is .62-percent, while high yield savings offer upwards of 1.4-percent.
Consumers should compare high interest savings account providers to determine which financial institutions offer the highest interest rates. One good source is Bankaholic.com; a division of Bankrate, Inc.
BankRate recommends seeking out banks that compound interest daily. Most financial institutions compound interest quarterly or annually which can adversely affect consumers who withdraw funds from their account. Consumers should investigate local, nationwide, and online banks to find the best deal.
At Bankaholic.com, visitors can read consumer reviews and compare banks to determine opening and minimum balance requirements, interest rates, and monthly service fees. Oftentimes, banks and credit unions offer cash incentives for opening a high yield savings account. However, it is important to read the fine print to determine if hidden fees exist.
Some banks charge fees for using ATM machines. Others charge monthly maintenance fees. Some assess fees if savings account balances fall below minimum requirements. These fees often add up to more than earned interest. It is best to deposit funds with banks offering low opening balances and minimum balance requirements.
Most online banks pay higher interest than brick-and-mortar banks. Online banks refer to financial institutions which are only available online. However, many traditional banks offer online banking services. Popular online banks include: EverBank, First Internet Bank, and E*Trade Bank.
For many people, finding money to deposit in a high interest savings account is challenging. In today's economy many people can barely afford to pay their bills, let alone save for the future. Those who are struggling to make ends meet should take time to review their income and expenses to determine where expenses can be slashed.
Financial expert, Dave Ramsey, recommends consumers save a minimum of 10-percent of their income. Individuals unable to achieve that financial goal should commit to saving as much as they can afford and strive to reach the 10-percent mark. Saving as little as forty dollars per month can add up over time.
Individuals should consider savings as they would any other bill. By making savings a priority, consumers can build a nest egg and have available funds when they need them the most. Consumers must develop a savings strategy in order to comfortably enter into retirement, buy a house, or save for college tuition.
Many people fail to realize that in order to buy a house they must have saved money for a down payment. Home mortgage providers prohibit borrowers from using borrowed funds from outside sources for real estate down payments. Borrowers must provide between 10- and 20-percent of the asking price to meet down payment requirements.
The sooner consumers start depositing funds into a high interest savings account, the sooner they can reach their financial goals. Begin by saving a minimum of 5-percent of weekly income and work toward contributing at least 10-percent to maximize savings potential.
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