What is the worst deal for your money? These days a savings account at a large commercial bank is one of the poorest long-term investments for your money. Commercial savings accounts at large banks yield some of the lowest rates of return for your hard earned cash. The national bank average for a traditional savings account at a commercial bank is a paltry 0.26 percent. A commercial bank saving account is a great way to build wealth for the bank! You pay for all of the convenience of multiple branches nearby. As a bank customer, you get paid an incredibly low interest rate, while the bank waits and hopes that your account drops below the minimum balance requirement so you can be charged a monthly maintenance fee. Online savings accounts are the best place for your hard earned cash.
Let’s say you placed $1,000 in a large commercial bank savings account such as Wells Fargo and kept it there for a year at a 0.10 percent interest rate. You would earn $1.00 in interest for the whole year. Wells Fargo has a minimum $300 daily balance requirement. If your account dropped below the $300 minimum for one day, you could be charged $5 in interest for that month. While it would take you all day to earn just over $1 in interest, you could lose $5 in a day. Large commercial banks like Wells Fargo, JPMorgan Chase, Bank of America, US Bank, and M&T Bank generate billions in fee income by charging monthly maintenance fees for accounts that fail to meet the minimum requirements. These large banks also pay some of the lowest interest rates to savings account customers. Remember that big banks are only a good deal if you have big sums of money to deposit. (I am not anti big banks. I think they are very useful for checking accounts as long as you aren’t paying fees for checking).
Online Savings Accounts – The Best Place For Your Money
The best place for your regular savings is at in a FDIC insured online savings/money market account. For every $1 of interest that you earn in interest at a commercial bank, you could earn 20 to 25 times at an online bank. The same $1.00 in interest that you would earn on $1,000 at a commercial bank could net you $25.00 in interest online. Banks such as CIT Bank, Capital One Bank, and Ally Bank offer online savings account that pay over 2 percent. Compare that to the 0.10 percent rate that you earn at many of the biggest banks in the country. I personally place my own savings at CIT Bank and Capital One because they pay me a much greater rate of return on my money than Bank of America and Chase Bank. Online banks have less overhead than commercial banks. They have lower operating expenses due to having less physical branches.
Opening an account at an online bank is incredibly easy. All you need to do is to enter your personal information. You don’t even have to fund the account to get started. Once you decide to fund the account, you can use your existing checking account, mail in a check, or make an electronic deposit. Most online accounts require as little as $1 for a savings account and the best part is no fees. Before opening any online savings, check the FDIC’s website to make sure the account is FDIC insured. This covers your account up to the $250,000 federal government maximum. Savers who are looking to deposit $1,000 or more should consider a money market account with its higher interest rate offerings and checkwriting features. As you can clearly see, an online savings account is the best place for your money!