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If you’re looking to increase your overall equity, you should be concerned about current savings interest rates. You earn money from savings accounts just from having your money sit there, but the rates are different from one bank to another. So, here are four facts that most people don’t know about saving rates and how to effectively save money.
You Can Get Better Rates from Online Banks
Online banks don’t have the same overhead as traditional brick and mortar banks which means they can offer higher interest rates to their patrons. If you never physically go to your bank, you might as well take advantage of online banks. You still get customer service, banking options, and pretty much everything else offered by traditional banks. The only thing that is missing is the face-to-face interaction. Compare the current savings interest rates for yourself to see what online banks can do for you.
CDs Aren’t Always the Best Place to Put Your Money
People put money into CDs because they are safe and they offer better interest rates than most standard savings accounts. However, most people don’t know that you can sometimes find savings accounts with higher rates than CDs, just look at the current savings interest rates and compare them from one bank to another. You can find a savings account with an interest rate as high as 0.8%. Most CDs only offer rates that high if you’re willing to leave your money in for two years or more. Why not put your money someplace you can access it whenever you want?
You Can’t Always Withdraw Money When You Need It
Some banks offer you higher interest rates when you open a savings account, but then they put restrictions on the amount of money you can withdraw in one transaction or over a period of time. This can be a problem if you want to use all of that money on a big purchase. So, be sure to look at the terms carefully when the saving rates are above the national average. It might be because you are submitting to withdrawal restrictions that can make it hard to get your money when you need it.
You Won’t See Much Money in Interest if You Have a Low Balance
Many people are attracted by high interest savings accounts because they think they are going to make a significant amount of more money than their previous savings account. This is true for some people, but not for people with low balances. For instance, if you typically make $2 per year in interest and you switch over to a high interest savings account, you might make $4 per year instead. That’s not enough incentive to switch. However, if your balance is in the thousands of dollars range, you’ll see bigger numbers.
As you can see, you can use saving rates to your advantage, but you need to have a good chunk of money before you see big interest deposited in your account. If you start with a small money investment, the process of building equity through interest will be slow going.