“A penny saved is a penny earned.”
Financial stability is one of the major aspects that determines the quality of life today. Often, the hardest thing about saving is taking the first step to set aside an amount that you will not spend immediately. Opening a savings account is one of the easiest ways to save money periodically. However, a savings account does not necessarily yield a high rate of interest in comparison to alternatives like Certificate of Deposits, Money market funds, Bond funds, and even tax-free municipals. The major difference is the payout yield and lock-in period for the amount that has to be set aside for a stipulated period. Any premature withdrawal can result in penalties and, possibly, a lower yield.
Here are some easy ways to maximize the returns on your savings account.
Saving for the long term is a periodic investment, and it doesn’t work if you dump a lump sum amount now and then without a proper progression. Start early and invest a fixed amount monthly to make the most of unfavorable interest rates. Multiple factors determine the rate of interest, and these factors are not under your control. However, you can control how much you save to build that cozy little nest egg for your retirement.
Statistics show that on an average, people in the country save no more than 4% of their total income every year. To get better returns 35 years down the line, you can bump up the percentage to a good 6% or even 8% of your income and put it directly in a high yield savings account. If you do have some extra money left over after meeting all your fixed and variable commitments, put it back in the savings account to earn a few extra cents on the dollars.
Banks offer an attractive feature of auto debit where you authorize the financial institution to deduct a particular amount directly from your paycheck and transfer it to a savings account. The transaction will not only devoid you of any unnecessary opportunity to spend the income as you earn, but it will also ensure a steady flow of cash into your savings account. You must check with your bank to find out the amount eligible for auto debit and compare the interest rates with multiple banks to ensure a fair return. In many cases, it is also possible to link your salary account to a different bank that yields a better rate of return on the deposit.
Savings is not just limited to the amount you contribute in your savings account; it also refers to the contributions made to various retirement account schemes set up by your employer and the Federal government. Individual Retirement Accounts (IRAs) are among the most popular schemes to set up a retirement savings portfolio with a benefit on income tax.
Here’s a list of the best savings accounts for long-term high-yield benefit:
A minimum $1 initial deposit and a high APY of 2.35% makes PNC Bank one of the popular options for opening a savings account. You must check with the bank to understand the fees applicable for opening a new savings account. It is also advisable to check the transaction fees and auto debit charges, if any, applicable during the tenure of the savings yield. Note that a high APY does not necessarily offset increased fees for using the institution’s services.
Personal savings accounts available with AENB offer a low APY yield of 2.10%. However, despite the comparatively low yield, the bank is a member of the Federal Deposit Insurance Corporation (FDIC), making it a safe financial institution to invest with for safer and stable long-term returns.
For a high APY of 2.35%, Citizens Access allows you to open a savings account. However, it is mandatory to secure a minimum account balance of $5,000 for the yield, making it one of the more premium institutions for long-term savings.
No fees, a decent APY set at 2%, and options for opening money market funds in addition to your savings account makes Capital One a popular alternative. However, you must maintain a minimum balance of $10,000 to secure the high yield APY.