Ever since I ditched my bank’s 0.01% interest rate for a savings account at a bank with a high interest rate savings account, I’ve been receiving $500 more a year in interest.
That’s a huge difference! Possibly the easiest $500 I will make each year.
Even if you don’t have a full emergency fund, you still shouldn’t accept rock-bottom interest rates on your savings. Banks are making billions in profits each year because people are parking their cash and getting almost nothing in return.
The national average interest rate on a savings account, according to Bankrate, is 0.10%. There are a few banks offering more than 1.5%, though, or at least 15 times the national average.
In my article How to Choose the Best Bank I talk about my approach to banking. I used to be like many people who kept a checking and savings account at the same bank. Unfortunately banks take advantage of customers who do this by giving them a savings account with a rock-bottom interest rate, like 0.01%, because they know there is a good chance they will keep a savings account open if they have a checking account.
Instead I instead propose opening a (no fee) checking account at a bank that is convenient, and a savings account at a bank offering a high interest rate. This gives you the best of both worlds, since you have the convenience of a bank with physical branches and convenient ATM locations, while also taking advantage of a savings account at a bank that is giving you the interest rate you deserve.
This list focuses on banks with high interest rates on savings accounts, where you can park your emergency fund.
Our Choice: CIT Bank
I’ve personally been using CIT Bank for over a year now, and they have consistently given me a high interest rate and good customer service. While businesses can change strategy over time, I get the sense that they are committed to offering a high interest rate.
While this bank does have a sizable required minimum deposit amount to receive their high interest rate, you will get the high interest rate as long as you deposit $100 a month into the account. Meaning, you can open the account with $100, and then deposit $100 a month each month to get the high interest rate.
Current APY (Annual Percentage Yield): 1.85%
Required Minimum Deposit: $25,000 or transfer $100 a month into your account
Ally’s high yield savings account is another good option if you want to shift your money from a low-interest savings account to one with high interest. Ally’s Annual Percentage Yield is below CIT Bank’s, but it does offer one advantage over CIT Bank. There is no required minimum deposit to get Ally’s high interest rate on your savings.
Current APY (Annual Percentage Yield): 1.70%
Required Minimum Deposit: No required minimum
Marcus by Goldman Sachs’ high-yield savings account is very similar to Ally in the sense that there is no minimum deposit required. At the time of this writing Marcus was offering the same APY as Ally, which is 0.15% lower than CIT Bank.
Current APY (Annual Percentage Yield): 1.70%
Required Minimum Deposit: No required minimum
from Young Adult Money https://ift.tt/2ZXVWqW
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