Saving money is important, but earning a competitive rate of interest on the money you save can be just as critical. The more you earn on your money, the faster your cash will grow. Checking your local and online banks for the highest interest rate accounts can help you make the most of your money.
High-Yield Savings Accounts
Most savings accounts pay only a pittance, but some banks offer high-yield savings accounts that pay much more. These savings accounts sometimes have a few strings attached, like a direct deposit requirement or a certain number of debit card transactions. Some high-yield savings accounts also have a tiered interest rate structure, meaning you earn the highest interest rate only on the money over a certain balance. It is important to review the fine print carefully to make sure you are earning a competitive rate of interest on all your money.
Money Market Accounts
Money market accounts generally pay a higher interest rate than savings accounts, but they often require a higher balance as well. The minimum balance requirements on money market accounts vary, but they can be as high as several thousand dollars. If you fail to meet that minimum balance requirement, you could be subject to monthly maintenance fees.
Certificates of Deposit
Certificates of deposit tend to have higher interest rates than checking, savings or money market accounts. The downside to these accounts is that they require you to keep your money tied up for a minimum period of time, typically a few months to a few years. It is important to weigh the benefits of the higher interest rate against the inconvenience of not having ready access to your cash.
High-Yield Checking Accounts
A number of traditional and Internet banks have instituted high-yield checking accounts, with interest rates as high as 10 times the average rate for such accounts. These high-yield accounts typically come with strings attached, so it is important to read the fine print and make sure you can jump through all the required hoops. For instance, some high-yield checking accounts require you to maintain a direct deposit and make a minimum number of debit card purchases every month. If you fail to live up to your end of the bargain, you forfeit your interest for the month.
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