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Getting Higher Interest on Savings Accounts
With ever-the-desire to find higher rates of return
on savings, the following gears toward this (assumes compounding
of interest, along with its benefits).
Comprehensive Research -
first and foremost. It might be foolhardy to simply shop rates
at one or two of the popular, bank raters. Besides, the fact
that getting top rates
are not
the only
factor for choosing an account (safety & risk issues, etc) the
depositor is best served by spending some true diligent effort
-- consulting with a financial planner/money market person
in the quest.
Moody's is a great place to start, for one. For another, Google "X bank rating"
can reveal a suprising amount of feedback. Comparing
savings account providers alongside one another with some accurately
assessed financial health perspectives, can go a long ways.
But, getting back to increased
returns alone:
-
Timing of Interest Payment -
when will the accrued interest be paid? Only after the interest payment
is made available will the funds be free and then possibly applied
toward a yield that brings greater performance.
- Fixed versus Variable Interest -
when rising rates are expected, it might make sense to opt for the
variable rate,
assuming the rise actually happens. A tie-in with this is the required
deposit term. And the greater the maturity (two years
or five years for CD's -
certificates of deposit - are not uncommon) the more difficult a
play trying to foresee this becomes.
A year or two out, the whole complexion of the interest bearing market
can change substantially, not to mention 6 months. This is
difficult enough even for the experts to get a fix on. On
the other hand, a variable rate without a time committment could
give enough flexibility needed to detemine the best move at
a given future date.
- Transferability of Funds - Depending on the account type, funds
on deposit may or may not be transferable until the coming date of
maturity. This might allow you to take advantage of
other opportunities arising in the market. And this may apply
to the minimum balance requirement in the account.
- Beware of any advertised rates that seem too good to be true.
A case in point is the 4.0% rate advertised September
22nd, 2008 by WaMu (prior to being bought by Chase on September 25,
2008) . Later, given the trouble
WaMu had been experiencing at that time, it became evident that the
high rate was set out merely to entice new depositors on to the bank.
The Fed as since proposed regulation preventing a distraught
bank, or those "less
than well-capitalized institutions " from offering
inflated rates to its customers.
Even so, while national rates
and caps might serve toward preventing the
reoccurance of this, while also possibly leveling down all savings
account interest
rates simultaneously, it's best to
beware.
See also high interest savings sources as well as online high interest accounts.
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Wednesday, February 22, 2012