In a recent post, Derek shared the secret to being rich and explained that long-term thinkers are goal oriented and understand the necessary value of saving.
However, before you start saving, think about these questions: 1) What should you look for in a savings account? 2) Which companies offer the best service? And 3) Above all, which saving account is going to help you reach your financial goals?
Here are some tips to consider when answering these questions.
APY, a Key Metric: The Annual Percentage Yield (APY) is the amount of money you earn on a deposit over the course of a year. Simply put: The higher the APY, the greater return on deposit.
Money Market or Regular Savings? This choice depends on the amount of debt you hold. If you’re in debt, consider a regular savings account while you pay it down. Once you can devote a large portion of your paycheck investigate money market accounts. Considering the switch to money market before you’ve paid your debt down isn’t advised. No APY will ever be higher than the interest rate on your credit card.
Why the money market? Opening a money market account is like giving the bank permission to invest your money. In return for letting the bank invest, you are guaranteed monetary growth. How does the bank make your money grow? Through the APY. The higher the APY, the more money you’ll earn each year.
Internet or Branch Bank? Internet and savings accounts go together like peanut butter and jelly. No bank tellers, minimal ATMs, and no branch locations mean an online bank has less expenses; less expenses means the bank doesn’t have to charge more or restrict benefits because they need to cover extra costs. Translation? Better perks and additional savings for you.
On the other hand, unless you have direct deposit set up, (which you should for efficiency purposes) you’ll need to find an ATM (which could be few and far between with online banks), or mail your checks to the bank.
All in all, however, online banks offer lower rates and fees in contrast to branch banks.
Speaking of fees: Many savings accounts require a minimum balance, or a minimum monthly deposit, though there are some savings accounts that don’t cost a penny. For most savings accounts, the largest fees are due to over withdrawing. Regardless, make sure to investigate all fees before signing up for an account.
At the end of the day the best savings account is the one that helps you reach your goals. Below are my overall selections for both the best money market and regular savings accounts. How does your current savings account match up?
This post was provided by Kyle Espinola of FindTheBest.com, an unbiased, data-driven platform designed to help you find the best savings account and just about anything else!
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.