20x More Interest Earned With This Savings Hack
In 2008 the Federal Funds rate was sitting at 0%.
Since then, the Federal Reserve has raised the federal funds rate six times beginning in 2015. Those rate increases however had little effect on how much interest that banks pay savings accounts.
Source: The Federal Reserve, Rate Watch, Haver Analytics
Now interest rates are headed higher. At the FOMC meeting on June 13, the Fed raised interest rates for the second time in 2018 to 2%.
What’s this mean for your hard earned money?
If you have $100,000 in a bank savings account today, how much interest would you earn in a year?
According to bankrate.com, the national average for a savings account today is 0.09%, which is just a hair above nothing, so you’d make a lousy $90 for the entire year.
That’s why you need to know you can do a lot better than “average” if you do a little homework. Bankrate.com has a treasure trove of information about savings accounts, money market funds and CDs.
In fact, you could make up to 20 times, or 2,000% more, by dumping your average bank account and moving your money into one of the better ones.
You won’t need a mountain of money to do so either. As the table above shows, there are several banks eager to pay top dollar to get your business. Even if you only have as little as $1 dollar to invest.
Yes… ONE dollar.
And the top four yielding bank savings accounts — which are FDIC insured up to $100,000 — are:
- PurePoint Financial: 1.90%
- CIT Bank: 1.85%.
- Goldman Sachs Bank: 1.70%.
- BBVA Compass: 1.70%
What’s the catch? Are there setup fees? Do you have to tie up your money for years and years?
In most cases there is no catch, no hidden fees or liquidity restrictions.
That said you should ALWAYS ask or read the fine print first to be 100% sure you know the stipulations.
Things to look out for include:
Limited Amount of Withdrawals: Online banks have to follow the same Federal Reserve banking regulations. For money market accounts, you can expect to be limited to up to 6 withdrawals in a month.
Minimum Balance: As the above table showed, you don’t need a lot of money to open an high-yielding savings accounts. However, some accounts have a minimum account balance to be eligible for the highest rates. Ask!
Interest Rate Ceilings: Some banks will only pay those fat yields on the first $5,000 or $10,000 of deposits. Everything above those ceilings receives a lower interest rate. Few banks do this… But ask!
Bait and Switch: There is nothing to prevent a bank from offering a fat interest rate to get you in the door and then drop the rate a short time later. This is rare but the only way to combat it is to vote with your feet… By walking away.
The last thing to note about these options are that almost all of these top-paying banks are online banks; not traditional brick-and-mortar banks.
But as long as you’re willing to conduct your business online, you can make a lot more money with the cash you already have.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch
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