Episode 48: Make the Most of Your Savings Account

Right now, everyone is trying to get the most bang for their buck and one way to do that is by effectively using a savings account. Today, Stacey shares some things to think about as you choose the best savings account for your situation since not every account is the same! For more information on series I bonds, check out episode 21!

Hi i’m stacy hyde and i’m back with another episode of better financial health in 15 minutes or less and what i’d like to talk about today is savings particularly savings accounts if you’re like most people you have a checking account at your bank where you bank whether it’s a national bank regional or even local and you also have a savings account and you’ve

Probably heard a lot about interest rates are going up and then you look at your savings account and you’re like i’m still learning nothing why is that but you know my interest rate on my credit card’s gone up my interest rate on my home equity’s gone up well that’s kind of a dirty little secret of the banking industry is that they’re very quick to raise their

Lending rates but they’re very slow to raise the rates they pay their depositors and that’s what we call a spread the that’s how banks earn money is they lend money out at a higher rate and they take money in is deposit at a lower rate and the difference between those two is how they make money with rates being so low for so long their spreads got compressed well

Now that interest rates are going up they are kind of slow to move up on their deposit side which brings the question if you’re saving for a new car if you’re saving for a house down payment you don’t want to put that money in the stock market because you’re going to need it pretty soon but you also want to earn some money on it so that’s when you will likely want

To look around for what we typically call a high yield or a money market savings account and you can find those some national firms online banks offer them and the thing to remember about an online bank is you want basically a national brand because you want that sort of customer service internet options that sort of thing but you also need to know and make sure

That you that it is truly a bank so you’re getting that fdsc protection which means that even if the bank were to failure your deposits are protected but you’d rather go with established brands because you don’t really want to be in that situation um discover bank ally bank chase amex marcus with goldman sachs although they’ve had some negative press recently bank

Break publishes some uh data on who has the best rates don’t get too caught up in the best rates um i did that same search found a smaller bank but then when i started paying attention to how long it took them to give me credit for my deposits it was excessive it was taking two weeks whereas the discovers and the allies of the world were three days which is more

In line with what i would say is reality of when they should have been credited to my account and so i think that there’s real value in using those name brands also some of them you can get local access to atms which is nice um and you’re earning you know two percent sometimes more for the same thing that you would have if you had it in your local bank and you can

Link your local bank to your online savings so if you need to transfer money um you can so i think it’s important to also pay attention to the deposit side of your balance sheet and as i’ve said in previous podcasts now is the perfect time to start building those cash reserves and it’s also nice as you’re building those cash reserves to actually get paid something

For that now it’s still going to be lower than what you’re paying on your mortgage certainly what it is on your credit card but it is a way that you can have um some very safe and earn a little bit on your money while you’re setting it aside or just saving it for a rainy day so definitely look at that see what you’re spending also if you have money that you know

You’re not going to need for at least two years go back and listen to our episode on series i bonds that are paying nine point six two percent right now and they’re federally guaranteed the maximum you can purchase is ten thousand dollars per year per person um but for your extra savings that you might need in three months six months or you know maybe longer it’s

A good idea to use a high-yield savings account and maybe there’s a local credit union or something like that that also offers a higher rate just make sure that if they have conditions for that higher rate that you can meet them some of them require direct deposit some of them require this that or the other so the nice thing about the online banks is there are no

Requirements because they don’t have the cost of the local branches um but that’s a good way to make a little bit of extra money and anytime we can make extra money while we sleep i think that is a great thing so this has been another episode of better financial health in 15 minutes or less and i’m stacy hyde

Transcribed from video
Episode 48: Make the Most of Your Savings Account By Envision Financial Planning