With the amount of national debt, both in the federal level, state level as well in the private sector, It’s no surprise that savings accounts rates are at an all-time low, almost near zero. Over the past few years, the federal government has issued a policy that keeps these rates low in order to boost an already struggling economy, making it ideal for borrowers, but less than formidable for savers.
Interest rates on most bank accounts, certificates of deposit and many other low-risk investments are so low that even the inflation rates surpass them. Basically, saving money isn’t doing anything for the saver. With no reward, there’s no reason to save.
Demographic data shows that most savers are women, mostly due to the fact that they’re more conscious about the future and tend to set the foreground for future investments and costs. This means that finding the right high-interest savings rate is not just a problem for the general public, but one that affects mainly female savers.
With things in the financial sector looking bleak, many are unsure whether there’s going to be a light at the end of the financial tunnel.
Don’t fear, there’s a glimmer of hope for savers that are still hunting for that coveted, high-interest savings rate. Where can we find these rates?
Bank Promotions for Traditional Savings Accounts
Because the amount of people opening savings account have decreased, financial institutions are now offering customers above-average interest rates in order to attract new customers. With no minimum balance or bank fees, these high-interest rates are set to reflect how long you keep your cash in the bank (i.e. 0.9% for a year, 1.75% for five years).
Online Savings Accounts
High interest rates are not only found in brick and mortar banks, they can also be found online! Data shows that nearly 60% of people are most likely to open online accounts that have higher interest rates. Thus, banks are finding new ways to attract a younger, tech savvy demographic by offering an online high interest savings account, making it a lot simpler to manage finances and savings remotely through your online savings account.
Money Market Accounts
Low interest rates are not only reserved to banks in need of customers. Rather than saving on the traditional savings account, why not save your cash via money market accounts? Money market accounts (MMAs) are accounts that require a little bit more than the regular minimum savings balance. MMAs may not offer the highest interest rates, but they’re typically twice the amount of traditional savings account rates, with the average rate being 2.47% nationwide. What’s unique to MMAs is that a saver can withdraw their funds at any time without a penalty fee. It’s definitely something savers should consider.
Money Market Mutual Funds
A money market mutual fund is an open-ended mutual fund that invests in short-term debt securities like commercial paper and U.S. Treasury bills. These accounts are relatively low-risk savings accounts that yield a higher interest rate than the traditional savings account. Although these investments are not necessarily guaranteed (i.e. bank notes), they’re extremely safe. Similar to the MMA, the MMMF have a slightly higher minimum required balance.
Certificates of Deposit
Certificates of Deposit (CDs) are similar to savings accounts in that they are insured investments (savings) that are relatively risk-free. Because they are insured by both the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Association (NCUA), they’re basically the safest investment. CDs are time deposits, meaning they cannot funds cannot be withdrawn until after the date agreed upon. The good thing about CDs is that they can be purchased in a variety of maturations (set time of saving), from a 3-month period, which typically yields an interest of 2.52% to a 3-year period, which yields a 3.83% interest rate.
Credit Unions
According to a recent study that measured interest rates between private banks, credit unions and thrifts, the highest savings interest rates can be found in credit unions. For example, one can expect to open a CD with a full percentage point more at a credit union than a private bank. This means that credit union members have an edge when opening savings accounts, MMAs, MMMFs and CDs at credit unions.
For the proactive and preventative woman, it’s always recommended to invest their future through savings, bonds, funds and deposits with high interest rates. Not only will you be making a wise investment, but you’ll be able to yield a lot more money than initially saved.
