5 tips to grow savings account earnings
1. Choose your vehicle carefully
Just because rates are low doesn't mean Americans should immediately transfer all their money to an investment portfolio or use their excess cash as a down payment for an investment property. Although the stock market is significantly more liquid than a home, emergencies can require investors to sell their holdings at a loss during market fluctuations.
If security and liquidity are important to you -- which may be especially true if you're nearing retirement -- FDIC-insured deposit accounts can still be a sensible choice. Consider
creating a CD ladder or opening a money market account. Both of these options may offer higher yields and greater returns than your standard savings account while still providing some liquidity and easy access.
3. Look online
Online banking has been growing in popularity, and if you haven't looked into this trend, you may be missing out on some of the advantages online banks offer. The trade-off with online banking is physical accessibility versus rates. Although online banks allow you to deposit and withdraw with relative ease, they do not have brick-and-mortar locations. In exchange, online accounts with banks such as
American Express Bank, Ally, CIT, Discover and GE Capital are likely to offer yields several times that of the average savings account.
If your savings account is an important part of your retirement nest egg, consider depositing money you do not immediately need into an online savings account to earn more interest. The difference in returns, especially when calculating compound interest, can be significant.
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