Savings Accounts Tips

Connecting Your Savings to Your Checking

The purpose of a savings account is to save money, but one of the mistakes people often make when they compare savings account rates and open an account is connecting it to their checking account in order to shift money between the two accounts. While this may seem like a good idea, it actually can result in a gradual decrease of your savings.

Imagine this: You're out shopping and you want to buy some books, but you're just a little short of cash in your checking account. How easy would it be to transfer money over from your savings and indulge yourself in this little shopping spree? Now imagine that your savings account is not connected to your checking account and you need to make a trip to the bank in order to move the money over. That could curb your consumer itch and prevent you from slowly spending all your savings.

So don't do the obvious. Choose a savings account with high rates, whether it's at your usual bank or another bank, don't connect it to your checking account, and save.

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Savings Accounts for Short-Term Savings

There are three different types of savings that consumers are usually interested in. The type that appeals to you can determine where you should actually invest your cash.

1. Short-term : For savings you keep less than 5 years.
2. Mid-term : For savings intended to be used 5 to 19 years from now.
3. Long-term : For savings not meant to be used for 20 or more years.

When you have long or mid-term savings goals, savings accounts can provide a benefit in that they balance out the risk of higher-risk investments. But it's important to limit the amount of savings you invest in low-interest savings over the long term.

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Setting up a Savings Account for Your Child

Creating a child savings account is a great way to save for your child's future and give them a head start in their future finances. This savings account can be used to finance their college education, purchase a home or invest in a small business upon their graduation from college.

There are many formal plans that are available to assist you in setting up your child's savings account, including 529 and UGTMA (Universal Gifts to Minors Act) accounts. These accounts allow you to save money for your child that is tax deferred. These plans allow the funds to be used for tuition, books, room and board. They can also be used to fund your child's private school tuition.

Setting up a savings account for your child is a great way to teach them to use money responsibly and to take charge of their financial planning at a young age. Encourage the child to set aside ten percent of their allowance or any monetary gifts to put into their savings account. Your child will enjoy the responsibility and will learn a valuable lesson about saving money. Save the money in an interest-bearing account to teach them about the power of compound interest.

Opening up a child savings account is a great way to save for your child's future while teaching him the value of money.

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The Best Bank Savings Accounts for You

If you're hunting a bank to put your money in, you'll want to do a savings account comparison among the best bank savings accounts available. If you don't take the time to do a savings account comparison, you might lose out by getting an account that doesn't offer you the interest rate you're really looking for. Some banks also have fees, and you don't want to get stuck paying any of those. The best bank savings accounts usually have competitive interest rates and no fees. Be sure to take a look at what the requirements are for avoiding fees, so you can do a proper savings account comparison.

The best bank savings accounts are offered by banks that are FDIC-insured, and that are open and up-front about whether they charge you for anything, how much money you must keep in your account, and other factors. If you're doing a savings account comparison and a bank is dodging questions, it's a safe bet it shouldn't be included on the list of best bank savings accounts. Also, if something seems too good to be true it probably is, so read the fine print when making your savings account comparison. Then you really can choose from the best bank savings accounts.

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Student Savings Account Tip

As a student when you open a student savings account the first thing you want do is to make sure to open an account that offers the best savings interest rates. Next is to make sure you choose a bank that requires no minimum balance, no monthly fee and no direct deposit. It is hard enough for a college student to afford college; you do not want to add a bunch of bank fees to it.

Lastly is how to get money into that student savings account. One simple way is save all your pennies. Have a piggy bank, jar or a can sitting in your room and put all of your pennies and any other extra change into it.

Once a month take your change to the bank and deposit it into your student savings account. If you chose one with the best savings interest rates then before long you will start seeing your student savings account amount grow and you will be happy you saved all that change when it is easier to pay for the extras you need in college.

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Use Business Savings Accounts to Pay Taxes and Earn Interest

Business savings accounts provide an excellent opportunity for small businesses and sole proprietors to set aside their quarterly tax fees while earning interest at the same time.

Many banks provide increased savings account interest rates or waive minimum balance fees when business savings accounts are connected to the business’s checking account.

Savings account interest rates vary from bank to bank and it is important for businesses to research their options prior to opening an account. It is often believed that business savings accounts must be maintained with the same bank as their checking account, however by exploring other options, businesses can find the best savings account interest rates which will earn the business additional money in the long run.

Business savings accounts are perfect holding tanks for quarterly or yearly taxes. When the money remains in the business’s checking account, it is all too easy to forget about taxes and fees that must be paid and the business falls short at tax time.

Setting aside money each month in business savings accounts ensures the money will be there when it is time to pay the taxes and, depending on the savings account interest rates, the business earns a profit each quarter simply by setting aside money for taxes and fees.

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Get the Best Savings Account Rates for Your Money!

Savings account rates vary at financial institutions and it will take some analyzing on your part to find the best deal for your money. Remember that the biggest banks are not always the ones with the best savings rates. It may be the smaller bank that has savings account rates more to your liking and you should be flexible when considering where you want your money to be to get the best savings account rates. Finding the right place for your money is worth the time and effort if you want to get the highest savings account rates.

Why be tempted to put your money in the bank you have been dealing with for years just because you are familiar with them? If the savings account rates they offer are not competitive with those of other banks, it might be in your best interest to go somewhere else in order to be satisfied with the return on your money.

Savings accounts rates fluctuate so be aware that just because you checked the rates at your neighborhood bank last week, they could have changed since then.

When you do find the right place to deposit your money, and you see the amount of interest on your monthly statement, you’ll know that your research was worth it!

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Choosing the Best High Interest Online Savings Account

If you're looking for a high interest online savings account, you'll find that you have some options. The problem is that many of these are through banks you haven't heard of - mostly because they don't have any brick-and-mortar locations you're familiar with. You can still get a great high interest rate savings account, though, even if you don't recognize the name of the bank. All it takes is a little bit of research. The main thing to look for is whether the bank that you're considering using for your high interest online savings account is FDIC-insured. If it's not, pass it by and look for one that is.

Without FDIC-insured status, it won't matter how great of a high interest rate savings account you get. If something happens and the bank goes under, your money will go with it and the the FDIC (Federal Deposit Insurance Corporation) won't be under any obligation to help you get that money back. Do your research and create your high interest online savings account at a bank that offers the highest rate and that's completely FDIC-insured.

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Online Savings Account Rates Can Vary

If you're looking for an online savings account, you're not alone. A lot of people are moving toward these accounts today, instead of the traditional accounts that brick-and-mortar banks offer. That's because online savings account rates are usually higher than those of more standard banks. That isn't always true, but it's proving to be the case most of the time. When you're trying to decide which online savings account to pick, look at more than the interest rate. Are there any fees you'll have to pay.

Online savings account rates that are high but that get essentially canceled out because of fees aren't doing anyone any good. Don't let that happen to you. Choose an online savings account that offers a good interest rate and that's free. Yes, they're out there. Finding them is worth the time it takes, since they can really help you earn a lot of money over time. Also, make sure you're getting an online savings account through an FDIC-insured bank. Great online savings account rates won't do you any good if the bank folds up and takes your money with it.

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Get Motivated with Calculators

Sometimes it's difficult to get motivated to save. After all, there are so many fun toys and gadgets to buy, so many vacations to take, and so many dinners to enjoy--why should you set aside money in a savings account and miss out on these fun things? These distractions can make gathering the discipline to save hard to muster. But there's a sneaky little trick you can play on yourself to help get motivated, and that is to use a savings account calculator.

A savings account calculator will show you how much your money can grow if you have the discipline to actually save it. Sometimes just having that hard number in print in front of you will really show you the benefit of saving and can make the difference between saving and not saving.

There are many savings account calculators that you can find online. Once you compare savings account rates, you know what return to put into the online calculator and you can compare how your money will grow depending on the account that you choose.

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Who Needs a Savings Account?

Savings account rates are not notoriously high. This leads many people to avoid the work put into comparing the rates of savings accounts and just leaving their emergency cash fund in their non-interest-bearing checking accounts. But no matter how low savings account rates are, some growth is better than no growth, so it's still better to deposit your money in a savings account than it is to leave it in a checking account.

Example
Let's say you have $1,000 to deposit in a savings account for emergencies. If you leave that in your non-interest checking account for a year, you'll still have that same $1,000 at the end of 12 months. It's even possible that you'll have less because you're more apt to the spend money that's in your checking account than the funds in your savings account.

Now, if you deposited the $1,000 in a savings account earning 1% interest compounded monthly, you would have an additional $127 by the end of the year. So even though a 1% rate is not high and certainly won't bring you to retirement, it's more growth than no growth.

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High-Interest Savings

Believe it or not, it is possible for the average investor to get high interest savings accounts. With rates upward of 2%, these high interest savings accounts may not make you rich or compete with the growth of stocks or mutual funds, but as far as savings accounts go, they're impressive.

High interest savings accounts are great tools for emergency cash, short-term investments, and any money that you want to gain a small return on for limited risk. It's important to remember that the rates on high interest savings accounts could be less than the rates of many bonds and CDs, which are also considered lower-risk investments. Before you settle on a high interest savings account, compare the rates of all low-risk investments.

Of course, bonds and CDs can lock you into their vehicles for a certain period of time, which can give you some liquidity risk. For instance, if you invest in a bond and need to liquidate, you must find a buyer. If new bond rates are higher, you might have to sell at a discount in order to get any buyers. In addition, CDs might have charges if you take your money out before it matures.

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Using Savings to Teach Your Children Financial Responsibility

It can be very difficult to find ways to interest your children in financial responsibility. With all the new toys and video games out there, your kids are probably more tempted to spend money on toys and gadgets than to put it into a savings account and save it for some mystical time that seems like it will never arrive. But savings accounts offer something that will eventually really entice your kids--the combination of accumulation and growth.

If you spend time with your child and balance their savings book, he or she will watch their savings grow in several ways. First, as they deposit money into their account over the years, it will naturally grow. On top of that, the savings rates in your child's account will add interest to their account and will show them how money can make even more money when it's invested. This combination of growth factors might help your children look forward to saving money.

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