Whenever you’re getting a bad return on your money, it’s easy to start looking elsewhere to see if the grass is greener on the other side. Investing in the stock market, CDs, or even real estate all seem like better options than earning a measly half-a-percent in a bank savings account.
But have no fear…there are better options out there. If you need to keep your money liquid (i.e. for your emergency fund), here are some other options to look into…
- Local Banks – In the banking world, you have the big boys like Bank of America, Wells Fargo, and Citibank. You probably won’t get a great return with any of their savings options. But then you have local community banks. These are typically locally-owned and only have a few branches in your area. Banks make money when they collect deposits from customers and then loan it back out (Read more here). So they need your money in order to make money themselves, so because most people would typically go to a big bank first, local banks have to work harder to attract your business, and therefore typically offer a better interest rate. Visit the Community Bank Locator page on the Independent Community Bankers of America website.
- Credit Unions – A credit union is owned and operated by a cooperation of members usually organized around a shared profession or interest. For example, there are credit unions for teachers, hospitals, or religious denominations. Credit unions typically have better interest rates than big banks, but of course, you usually need to be part of some type of cooperation to be able to use the credit union. In some cases, you can just pay a fee to join even if you’re not a member of that cooperation. Go here to Locate A Credit Union or to learn more about How To Join A Credit Union.
- Online Saving Accounts – Online banks don’t have any physical branch locations or ATMs, so they have less overhead expenses and can pay you a better interest rate. But you do have to have a traditional bank account which would be connected to your online savings account, so you can transfer money back and forth should you need to withdraw it. Here are a few online savings accounts we recommend: HSBC Direct, ING Direct, e-Trade, FNBO Direct, or Dollar Savings Direct.
You can also check out www.BankRate.com to compare interest rates on accounts, not only for banks in your area but also for online banks.
YOUR 2 CENTS – Any other recommendations for places to get a better interest rate for a savings account?
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