The national average interest rate for savings accounts is 0.06%, according to Bankrate’s February survey of institutions, so you may not really have been pushed to put your money in an account. traditional savings. But experts say there are still reasons to have a savings account: you need 6-9 months of spending in an emergency fund, and you may also have short-term savings goals. term. “Savings or emergency funds that you will need in the short term should be placed in an easily accessible account without penalties or tax consequences. Since the primary goal is accessibility and security of capital, there’s no harm in trading low interest for that,” says Certified Financial Planner Luis F. Rosa. But don’t settle for 0.06% — that’s where your savings can earn way more than the average.
A number of banks offer interest rates of 0.50% or more. As of February 8, 2022, Goldman Sachs’ Marcus is offering 0.50% with a minimum balance of $0 and a bonus of $100 depending on qualification, while Discover Bank Online Savings and Ally are offering 0.50% with a minimum balance of $0. LendingClub offers 0.65% with a minimum balance of $2,500, Monifi has an APY of 0.60% with a minimum of $0, and Comenity Direct’s rate is 0.60% with no minimum balance required. But pay attention to fees or conditions associated with the account, monthly minimums, as well as information such as whether or not you can issue checks from it. In other words, read the fine print before logging in.
Some savings accounts pay even more: Varo is one of the banks offering up to 3%, but Rosa recommends checking their requirements to be eligible as certain conditions must be met like using direct deposit, maintaining a daily savings balance of $5,000 or less for the entire calendar month and keeping your bank account and savings balances at or above $0 for the entire calendar month. And the Aspiration Plus account, which costs $5.99 per month and is billed annually, offers 5% but also has a number of hoops to jump through.
It is important to note that these terms change rapidly (we noted these terms on February 8). “If I say one bank is better today than another, that could change in a week. It is the same with other investments. If it’s not a short-term investment, you should be able to do much better than 0.06% over time,” says Robert Conzo, CEO and Managing Director of The Wealth Alliance.
And if you have longer term goals, these savings accounts are not the right choice. For goals of at least a year, you might want to consider Series I US Government Savings Bonds, which currently pay 7.12% for bonds purchased through April 2022, but you should hold onto them. for at least a year. For goals with a one-year or few-year timeline, you might want to think about something like CDs, the pros say. “If you have money set aside for a down payment on a home but don’t plan to buy the home for one to two years, consider a short-term CD, provided the interest rate interest is higher than the rate offered on a high-yield savings account,” says Rosa.In the meantime, if you want to save for something like retirement, investing is your best bet.