You earned it! And not only do you want to keep it, but you want to grow it! We are talking about cash of course. You work hard, your budget, and you save. You keep your future in mind and plan ahead. But while you know you need to save, there is the question of WHERE to save your money for the best impact. Let’s look at some of your different options to consider when deciding where to stash your cash.
The first thing you will want to decide is how much risk you want involved in storing your cash. For the purposes of saving rather than investing, various savings vehicles carry very little risk as most are insured up to $250,000 by the FDIC. This means that if an institution goes under or there is some other upset to your bank, the federal government will insure up to that amount. This feature will vary depending on the institution and type of savings vehicle, so be sure to confirm this when choosing an institution and an account or program.
Online Savings Accounts
There are some decent online banks that have higher than average savings interest rates than some of the brick and mortar options. Online-only banks have the benefit of not having multiple locations to run and maintain, making their expense footprint smaller. It is for this reason that some say they are able to offer better savings rates for the money you deposit. Here are some examples of competitive online banks to consider:
- Ally Bank: With a current high-interest savings rate of 2.10%, this is one of the higher-yielding accounts you can find. No account minimums, some free checking features, and no monthly fees as of right now make this a very appealing place to keep your cash on hold. Customers seem to like Ally Bank too, which makes it that much better.
- Discover Personal Savings: With no fees or balance minimums and a healthy 2.05% interest earned, this isn’t a shabby deal for an account to consider. Opening an account is simple and can get you on your way to saving- quick.
- Vio Bank: With a $100 minimum to open the account, VIO can give you one of the best savings at a current rate of 2.52%. The caveat to this account is there will be monthly charges if there is a lack of activity, which can be defined as deposits or withdrawals over a set period of time. This can eat away at your savings if you aren’t careful.
In addition to online savings accounts, FDIC or NCUA insured certificate accounts can be another good way to save your cash with little to almost no risk. Certificate accounts at various credit unions and institutions (as well as online institutions) require a minimum amount be deposited and not touched for a certain length of time. The time period can range from a number of months to a number of years. Typically, the longer the term and the higher the amount deposited, the higher the interest rate and potential earnings. So if you know for sure that you will not need that amount of money in that set amount of time and you are not looking to involve any market-related risks, a certificate can be a great option to give you a slightly higher interest rate and virtually no risk associated.
Be aware however that rates in these ranges, while way better than most traditional savings accounts, are still substantially lower than the average return on other types of investments. The rates on these savings accounts will barely keep up with inflation, if at all. These are not meant to be investment vehicles, but rather a place to park your money safely while recouping some of the inflationary losses you will see hit your regular savings. If you are looking for an insured and very low-risk place to put your money, you can start here.