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Is Your Savings Account Making Any Money? Consider These Alternatives Instead

Is the money you have in your savings account earning you any additional money? Are you funds sitting idly in your account generating little to no income?

You may have set aside cash in a savings account earmarked for specific goals such as a “rainy day fund” or a new car. If your goal is to easily and quickly access your savings within a two to three year time period but don’t want to take on any investment risk, consider opening a high-yield, interest-bearing savings account with an online bank or credit union. They typically offer more competitive interest rates than most common banks with physical locations and ATMs such as Wells Fargo or Bank of America.

Most standard bank savings accounts offer an average interest rate ranging from 0.15% to 0.50% in today’s market environment. That means if you have $1,000 in your account, you are making a measly $1.50 per year. Over a 3 year time period, your account will have only earned $5, considering you do not make additional contributions. If you set aside that same amount in a savings account that is offering at least 1.00% annually, you would make six times as much.

Even though the online banks do not have physical locations, it doesn’t mean you won’t be able to access your cash quickly and easily. Technology has made banking so much more efficient nowadays, allowing you to tap into your money more readily and timely than having to drive to the bank or local ATM.

Save time by linking your checking account to the online savings account; this way, you can simply transfer money directly from the online savings account to your checking account whenever you need it.

Below are three high interest online savings bank accounts that are great alternatives to your standard bank. 

Ally Bank’s Online Savings Account

  • Pros: Earn 1.05% interest annually. No monthly maintenance fees or minimum balances. Remote mobile check deposit available.
  • Cons: There are no local banks to deposit cash.

Synchrony High Yield Savings

  • Pros: Earn 1.15% interest annually. No monthly maintenance fees or minimum balances. Remote mobile check deposit available. Offers optional ATM card.
  • Cons:  Only one branch location in the U.S.

Salem Five Direct eOne Savings

  • Pros: Earn 1.25% interest annually. No monthly maintenance fees or minimum balances. Remote mobile check deposit available.
  • Cons:  Requires $100 to open an account. There are no local banks to deposit cash.

NOTE: Just like any other bank, the interest rate you receive may change depending on current market conditions. Also, you may be subject to paying taxes on any interest you earn in the account. But the amount you are earning in the long run outweighs earning less than 1% with your money in other accounts.

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This data is for informational purposes only and Capital Benchmark Partners, LLC ("CBP") is not affiliated with any of the businesses mentioned nor endorses them. CBP is not endorsed by any third party entities for their inclusion in this article. Past performance is not a guarantee of future results. The information contained herein has been obtained from sources believed to be reliable but the accuracy of the information cannot be guaranteed.

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