This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 tips to grow savings account earnings

With the likely confirmation of Janet Yellen as the next Federal Reserve chairman, consumers should be prepared for ultra-low interest rates to persist for at least another 12 to 18 months. As a current vice chair on the Fed's board of governors, Yellen is widely expected to keep the Fed's easy-money policies intact in the near future if she reaches the Fed's highest post.

Although many Americans may benefit from low mortgage rates, a bullish stock market and increased liquidity in the financial system, families who save a significant portion of their household income in savings accounts are paying a price for these low-rate policies. A majority of large commercial banks are currently offering yields of well under 1 percent -- a fraction of their historical average.

Nevertheless, everyone needs a savings account with an emergency fund of six to 12 months in living expenses, so how can consumers manage their bank accounts to maximize what earnings are available? Here are five tips that can help.

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.

2. Insist on free checking and savings

You work hard for your money -- shouldn't you have free access to it? With the number of banking options available today, a little comparison shopping could help you find a free checking and savings account with absolutely no monthly fees. If you're having trouble finding these at local institutions, comparing bank accounts online is a great next step.

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.

4. Watch for overlooked fees

Most consumers focus only on minimum balance requirements, monthly fees and interest rates, but certain hidden costs that are rarely discussed when setting up your account can increase your banking costs. Two examples are overdraft protection and ATM fees. Paying $30 to overdraft your account by $5 and getting charged a $2 fee for a $20 withdrawal are examples of bad banking practices.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs