When lending rates are low, so are the interest rates on savings. This makes it more important than ever to find the highest interest savings accounts. Shopping around and carefully looking at the options will help one find the best rates available.
The best thing about savings accounts is that it is money earned with virtually zero effort and risk (they are in fact much safer than keeping valuables at home). Therefore, anything earned from them can be thought of as a bonus. Keep in mind though that the rate of return should equal or exceed the inflation rate, or it is technically a financial loss.
Why people use savings accounts
Over the long term, the average rate of return for bank savings is lower than other investments. However, they are much safer, and it is a good idea to have cash on hand in case to meet any unexpected difficulties. Savings accounts offer a way to safely store that cash and earn some interest too. They offer peace of mind other ways of keeping money do not.
Finding the highest interest savings accounts
Interest rates are constantly changing as are the savings rates banks offer. There are many sites that provide information on what banks are offering the best rates. To find them, simply do an internet search with keyword phrases such as “highest interest savings accounts.” Many sites will give constantly updating lists. To avoid having to change banks to get the best high interest savings account, look for banks that consistently have the best rates over time.
Online savings accounts
Online bank account rates are almost always the best. They offer the further advantage of easy monitoring from the comfort of home. Banks will often offer higher rates on their e-savings accounts than on their regular savings accounts.
What to look for in savings accounts
Apart from the rate, the single most important thing to look for is the security of the bank. The account should have FDIC insurance if it is a US bank or the appropriate guarantees if located outside the US.
Many banks have restrictions on their highest interest savings accounts. For example, they may have a minimum balance that must be maintained. Carefully check all conditions before deciding on any account.
The account should also include easy online access for monitoring.
Money market savings accounts
Money market accounts offer the highest savings rates but have the most restrictions. The minimum balance requirements are higher, and they often restrict the number of withdrawals that can be made every month. However, they sometimes offer extra services like the ability to write checks.
Be careful not to confuse money market savings accounts with money market funds. Money market funds are usually offered by brokerages and invest in highly liquid and safe securities. Unlike money market savings accounts, these are not FDIC guaranteed and can potentially drop in value.
With the constant fluctuations in rates, people should always be looking for the highest rate savings accounts and be aware of the conditions as well as what is available.
