How to Choose a Savings Account When Interest Rates Are Increasing

How to Choose a Savings Account When Interest Rates Are Increasing

Rate information contained on this page may have changed. Please find latest savings rates.

It is quite evident that every bit of extra cash of interest makes a huge difference. Selecting the best savings account can sometimes prove to be a daunting task in a market where the interest rates are finally beginning to increase.

Here a 7 tips to help you find the best option for your savings:

1. Shop around.

To identify the best bank with the most friendly interest rates, you must come out of your comfort zone and shop around. You might have had a savings account at a certain lending institution since your childhood. But, this does not imply that that particular bank is the best place to save your money when the rates are increasing.

Banks offer extremely different interest rates. It is possible to find that banks in the same geography and targeting the same market may have interest rates on similar products that are very different.  One bank can offer a one percent interest rate on a certain product, while another might provide a rate of zero, and yet another might provide a rate of two percent. Additionally, keep in mind that just because a certain bank has increased its rates, it is not guaranteed that your bank will do the same.

Thus you must compare the rates among the different types of banks and other credit unions. Failure to conduct such a comparison of the rates might as well hinder your personal financial progress.

A great starting point might be the Bestcashcow.com. We enable individuals to check both local and online money market account rates, as well as yields on certificates of deposits.

Click here to check the best online rates! If you are looking to save more, check the latest cd rates!

It has been proven that most customers find it quite difficult to abandon their previous banks. This could be the moment to make the decisive move.

2. Consider bypassing the brick-and-mortar institutions.

Online banking institutions offer comparatively higher interest rates to the brick-and-mortar banks.

Most savers are always concerned with the security and safety of the online banks but you should know that these banks are always secure as long as you stay within established FDIC or NCUA limits.

The online bank accounts are insured by the Deposit Federal Insurance Corp (F.D.I.C), just like the traditional banks. Most of them are owned by big players in the financial service sector including Discover Bank, American Express Bank, and GE Capital Bank. Others include the online sub-divisions of the so-called brick-and-mortar banks.

Since banks operating online are cheaper to manage they are likely to share a part of that savings to their customers. Most of them always accept clients throughout the nation.

Older customers might be hesitant to change to online-only financial institutions, whereas younger millionaires don’t even want to be seen walking into a bank nowadays.

3. Go local.

If you want a bank that you can visit occasionally, you should definitely consider working with either a community bank or a credit union.  In a rising rate environment, some such smaller institutions often increase their rates more often than the behemoths.  Often, these organizations need to generate deposits much faster.

Even though the rates of these banks might be higher, on most occasions their branch network is limited. This could be a major disadvantage, especially if you are a frequent traveler who always wants to access a branch or use a fee-free card of ATM while traveling.

Yet, most credit unions are part of a network that enables individuals to conduct their banking services with any credit union that is a member and use its ATM for free.

4. Avoid at all cost bait-and-switch.

Individual banks might provide attractive interest rates in a bid to seek your attention, only to decrease them after a few months.

Financial institutions can increase or lower their respective rates on savings. But promotional or introductory rates are only meant to last for a shorter period.

You should conduct a small research and read and understand the fine print before opening a savings account.

(As a policy, BestCashCow does not list short term bait-and-switch rates or exploding rates, such as those offered by EverBank as these are always a bad deal of the depositor).

5. Stay liquid.

Keep your cash liquid at a time when the rate is starting to increase.

The prospect of keeping your money in the savings account offers you the flexibility that a certificate of deposit cannot provide. A CD requires individuals to lock in their rate for a particular time. It could be for as short as three months or as long as several years.  While CDs can always play a role in a balanced portfolio, you should be careful a large part of your portfolio to CDs if you feel that we may be entering an environment with increasing interest rates.

Most short-term CDs offer similar rates to the top paying saving accounts. Also, other CDs have even lower rates of interest. Let us assume that you purchase a one-year certificate of deposit that offers an interest rate which is the same as that of a savings account. If the rates on the savings account start rising, you will be forced to keep your money in the lower-rate CD until the end of the year. And if you withdrew the money from the CD early, so as to transfer it to a savings account, you would get penalized!

6. Put savings on autopilot.

You should look for an institution that offers a savings account that pays higher rates of interest coupled with a checking account. This way you the paycheck will be deposited into your checking account and a portion of it will be transferred automatically to your savings account.

When you first pay yourself automatically and complement it with higher rates, it makes your savings grow a little bit quicker.

7. Understand the account conditions and terms.

You must know that not each and every bank has the same conditions and terms for opening a new savings account.

Certain banks may allow opening an account with one deposit; while others might require a minimum deposit of ten thousand.

Also, you might need to keep some amount of cash in your account so as to earn interest. On the other hand, you may get a lower interest rate if you have only a few hundreds of dollars, rather than thousands, on deposit in your account.

And certain banks normally charge a service fee on a monthly basis, if you don’t keep a certain minimum amount in your account. So you should really read the account disclosures before opening an account.

Image: Image courtesy of Stuart Miles at FreeDigitalPhotos.net

If You Have $5 Million at Morgan Stanley, Merrill Lynch or JP Morgan, You Can Make $50,000 over the Next Year with 1 or 2 Hours of Work

If You Have $5 Million at Morgan Stanley, Merrill Lynch or JP Morgan, You Can Make $50,000 over the Next Year with 1 or 2 Hours of Work

Rate information contained on this page may have changed. Please find latest savings rates.

It is almost Labor Day and in the Hamptons the refrain at the end-of-summer cocktail parties is the same that we have heard all summer.

The refrain goes something like this:

“I’ve got $5 million in cash at Merrill Lynch.  It is earning me zero.  I don’t know what to do.  We may just elect in the very near future a truly unprepared and unstable President and the stock market is at an all time high.  I for one am not getting in now.  And, interest rates are at an all time low, so I cannot buy bonds.  My broker calls me and tries to sell me crap that neither he nor I understand.  I have no way to earn anything.”

The answer to this refrain is pretty simple.  At the moment, BestCashCow’s savings tables show that there are eight online savings accounts that currently pay at least 1% interest.  Depending on where you live, you may also find as many as another four or five local banks and credit unions servicing your market that are paying over 1%.   You’ll then find another eleven online banks - not including those banks you have already identified from the savings tables - that pay over 1% on 12-month certificates of deposit (CDs).

If you put $250,000 in each of 12 of so banks paying over 1% on savings accounts that are either online or in your market, you will put $3 million to work safely.  By putting another $250,000 into eight other banks that will give you over 1% in a one-year CD, you will be safely stocking away another $2 million.  Between now and next Labor Day, you will generate at least $50,000 that you would not otherwise make over the next year, albeit that money is fully taxable and the money in CDs cannot be accessed without paying an early withdrawal penalty.

There is a second Labor Day refrain in the Hamptons and it goes something like this:

“I cannot believe that I need to write another check for $45,000 to Horace Mann for my 12-year old’s tuition for next year.”

The answer to this refrain is also pretty simple.   By opening these accounts, you will generate much of the money to cover those annual tuition payments, even after you pay your Federal and New York State and City taxes.


US Faces Extraordinary Risk of Economic Catastrophe – Much like 2004 Atocha Scenario

US Faces Extraordinary Risk of Economic Catastrophe – Much like 2004 Atocha Scenario

Rate information contained on this page may have changed. Please find latest savings rates.

Even if the polls indicate that Hillary Clinton is the likely next President, there is a high risk right until the day of election that outside influences could cause the US to elect a President who is in the best case "unfit".

Donald Trump and his surrogates have spouted complete nonsense for months, and appeal strongly to a single segment of the US population.  There is also a highly reactionary element of the US population that may already realize that he is unfit to leave his gilded perch above 5th Avenue (and is unfit to serve in any elected role), but who just might vote in his favor in the event of a terrorist attack in the weeks immediately preceding the election.  It goes without saying that Donald Trump’s election and his economic policies would lead to immediate and unprecedented global economic crises.

Unfortunately, the scenario isn’t entirely unprecedented.  As it entered 2004, Spain had the strongest economy in Europe.   Under Prime Minister Jose Maria Aznar and the Partido Popular (PP), Spain’s economic policies were attracting investments of large multinationals from around the world.  Aznar also lead Spain to be active in the US-led campaign in Afghanistan and was preparing to deploy troops to Iraq, which was highly controversial.

Aznar had been decisively leading in polls prior to the general elections scheduled for the Spring of 2004.  However, when Al Qaeda operatives struck Madrid’s Atocha station on March 11, 2004, they not only killed 192 and injured over 2000, but also caused Aznar to be defeated days later by Jose Luis Rodriguez Zapatero and the Spanish Socialist Workers’ Party.    In the years that followed, Zapatero and the Socialists pursued a xenophobic policy that removed Spain from involvement in military campaigns abroad.  They also adopted economic policies that laid waste to the Spanish economy.

One way to partially protect oneself from a similar situation in the US is to move money now to online savings accounts and short term CDs.

Editor’s Note: Unlike the situation that the US faces, Jose Luis Rodriquez Zapatero was not a Donald Trump.   While he destroyed the Spanish economy, he did not wage war against minorities or women in Spain.  He did not unilaterally control access to nuclear weapons.   While the US faces a risk of a similar scenario, it faces a still much greater risk to the country, and to putting world civilization in danger in the current election.