SAN ANTONIO — Earn extra money without any extra work by making sure your savings gets the highest interest rate possible. To do this you will need to shop around to find the best rate.
“We are finally seeing these savings rates come off the floor,” said Ted Rossman, a senior credit card industry analyst with Bankrate.com. “Not at big banks, the giant national brick and mortar banks, their rates are still next to nothing.”
So where should you look? Your computer. Online banks can have the best interest rates for your savings.
“You can really ramp up the amount that you can save,” said Matt Schulz, chief credit analyst with LendingTree. “Some people get a little bit nervous or a little queasy about putting their savings in an online bank where they trust the big behemoth banks a little more, but the truth is that most of these online banks are giving the biggest returns.”
Here is a comparison of the numbers: The interest rate at a traditional bank is about .02%. You can find interest rates as high as 2% at online banks. Two percent does not sound like a lot, but there is a big difference. If you save $1000 you will earn 20 cents in interest at a traditional bank. Yet, you will make an extra $20 by putting the same $1000 into an online bank.
“Every little bit helps when you’re trying to stretch that budget in these expensive times,” Schulz said.
Before you move your money, check these items:
- Make sure the online bank is FDIC insured.
“It doesn’t matter if you haven’t heard of them before, as long as it’s backed by the government, you don’t need to worry about losing your money if the bank were to go under,” Rossman said.
- Also, be sure you meet the minimum balance requirements to earn the highest interest rate.
“You may see a bank offering a return of 2% or higher, but you may not see right off the bat that you have to deposit $5,000 or whatever the set amount might be to earn the maximum amount,” Schulz said. “If you don’t put in as much money, your return may not be microscopic, but it probably isn’t going to be what you might have seen at that highest level amount. It’s important to understand minimum balance requirements as it relates to how much you earn.”
- Check if there are any fees.
“If you deposit enough money, a certain amount, a certain threshold of fees may be waived,” Schulz said.
Rossman said online savings accounts are usually fairly fee-friendly and generally have low minimums.
“Maybe it’s not for everybody,” he said. “But I think especially with rates going up, there’s definitely a selling point there.”
- Plus understand you may not have immediate access to your money with an online bank.
“You might want to think through withdrawal time,” Rossman said. “We’re usually taking a business day or two. The fact that it takes a day or two to get your money from an online savings account can actually be a positive in the sense that you might be less likely to raid it for some sort of impulse purchase.”
“Savings accounts aren’t always as liquid or easily accessible as your average checking account,” Schulz said. “So it is important to understand how long it may take for a transfer to occur if you need to pull that money.”
It is a money move that might pay off because it is paying you more.