How to get a higher interest rate on your savings with online banking
In our daily digital life, apps of all kinds, from health and fitness apps to coupon apps, can make our life much easier. And with the ease of checking balances with the touch of an app (plus the invaluable help of robo financial advisors), it’s no surprise that online savings accounts have become the norm. . But just like you are looking for a high interest rate with your traditional banking institution, are you looking for a higher savings yield with your online accounts? Is it possible?
The answer is yes. Here are some expert tips from financial advisers on how to get higher virtual savings interest rates so that your money can make you money while you are not living.
Know your rates.
When it comes to seeking higher returns for your accounts, the first step is knowing a good range of interest rates to pursue. Like most things in life, interest rates fluctuate whether you are banking online or in person.
Kerry Keihn, financial advisor and director of client services and operations at Earth Equity Advisors, shares that a (current) solid interest rate to look for is between 0.15% and 0.60%.
Naturally, you’ll want to stay on top of the information your bank gives you when rates change. This way, you can make informed choices, including, if necessary, transferring your balances to another place where you will earn the most.
Determine which bank is right for you.
Once you have the percentage of interest you hope to earn with your account, it’s time to see if your current bank matches that rate. If not, you may want to consider switching to a bank that offers your target interest rate.
Ellen Li, CFP, MSNA, Senior Advisor and Partner at Financial Alternatives recommends checking your current bank’s 1099-INT statement and go from there. “Sometimes investors think they’re earning a rate, but the actual rate they’re earning is a lot less,” she says.
Li also echoes the previous advice to keep an eye out for interest rate fluctuations. A bank’s rate might be competitive now … it might not be competitive at all in a year or two, “she adds.
Before switching banks, take the time to do your research to see which online bank is right for you, not only in terms of interest rates, but also in terms of accessibility, fraud protection, points and money. ‘benefits, etc.
“Most online banking options have a lot of features and are user-friendly, but you want to be sure that by switching banks you won’t miss out on something you use regularly,” advises Keihn.
Remember to read the fine print.
Now that you’ve found the opportunity to take advantage of a higher interest rate on online savings, it’s important that you read the fine print. Often, other terms, such as higher fees, come with a better interest rate.
Keihn urges consumers to take their time comparing their current bank’s fees against various other banking options. She points out that while online banking is more affordable than traditional in-person-only options and tend to have higher returns, they may come with higher fees. Therefore, making the transition may not be worth it.
In addition to accounting for these potentially higher fees, Li advises savers to monitor the amount of money they plan to accumulate in digital savings over time: make sure it stays below the FDIC limit of 250. $ 000. Additionally, do a triple check to make sure your online banking is FDIC insured.
Finally, in some states, such as California, online banks may not support trust accounts. If this is important to you, be sure to ask before you change banks.
Consider a hybrid savings option.
For those who aren’t yet ready to have all of their assets online, Keihn shares that it’s perfectly okay to move. part of your digital savings and keep a remaining balance in a physical bank. To date, the average US interest rate is only 0.6%, but Keihn says that doesn’t mean there isn’t an opportunity to look for higher yields.
“In addition to evaluating a bank based on its fees and interest rates, remember that you can also evaluate how it aligns with your values,” adds Keihn. Just because online accounts are handy, don’t overlook local branches as well as credit unions. “Local community banks and credit unions often have good interest rates with online banking functionality and are important community players (some even offer financing for green renovations),” she explains.
All in all, opting for this type of two-part hybrid savings account – with one at a small local bank or credit union and another at a large online bank earning you high interest – may be your goal. best bet to get the most bang for your buck with peace of mind.