We are all plagued by money-saving challenges. Is that thief stealing money from your sock drawer each month? They have a name, and it’s called inflation.
Why Is Inflation Affecting My Savings?
Inflation has made everything more expensive since early 2021. Eggs, milk, gasoline, rent, and insurance, to name a few, all aid in the money-saving challenges we face by taking up so much of people’s available income. Borrowers and debtors have been hit especially hard as the Federal Reserve Board continues hiking interest rates. Mortgages, car loans, and credit card rates are at levels not seen in almost three decades.
Options to Help You Save
Still, those with some cash laying around can be handsomely rewarded for the first time in well over a decade. All people need to do to combat those money-saving challenges is take just a little time to explore their options. The current high-interest rate environment has pushed up the yields considerably on savings accounts. You could be forgiven for not noticing though, as the big banks have lagged considerably in paying their customers more. Credit unions typically offer a slightly competitive edge with interest rates, but the best returns bar none will be found with a high-yield savings account at an online bank.
Why Do Others Have Doubts?
Many mature Americans have a fear or hesitancy to switch to an online bank. Some are anxious that their money is at risk or that they will not have easy access to their funds. Others think it will be complicated or just don’t understand how it all works. But all of those fears are unfounded. The inertia is literally costing people thousands of dollars.
Is Online Banking the Answer?
Online banks ensure funds like any other bank, at $250,000 per depositor. In nearly all cases, you link your existing bank account to a high-yield savings account. A new account can be opened online in minutes. You need only your driver’s license information plus routing and account numbers from your existing institution. It’s a myth that there are no customer service representatives available to assist. Agents can help, though they are unnecessary if you fill in the information as requested.
Which Banks Are the Best for My Money Savings Challenges?
What can you get? Try rates at 4.5% to 5.1%. If you type “high-yield savings account” into any search engine, you can get a list of banks paying those rates. Investopia.com, nerdwallet.com, and bankrate.com provide good up-to-date lists. The highest yields as of May 15th are at CFG Bank (5.07%), Newtek Bank (5.00%), TotalDirectBank (4.95%), and Primis Bank (4.92%).
The only caveats are the amount required to open, the minimum required each month, monthly fees, and perhaps the time it takes to transfer funds. Primis Bank, for example, only requires $1 to open, no minimum ongoing balance, no monthly fee, and funds are transferred and available to the customer’s linked account within 24-48 hours.
National Average Savings
The nationwide average savings yield as of May 2023 at all of the nation’s banks is 0.39%. Someone with $15,000 stashed in a savings account at that rate would earn $58.50 in one year. At Primis Bank, interest earned would be $738. Imagine if that were $50,000 or $100,000 saved in there.
Now What?
In the past, you had to lock up your funds in certificates of deposit (CDs) to earn higher interest rates. No longer. The rates on high-yield savings accounts and 1, 2, and 5-year CDs are nearly identical. Consider looking into an online bank. Your wallet just may say thank you, and those money-saving challenges just may disappear.
Jeff Szymanski works in political communications for AMAC Action and previously taught high school economics, history, psychology, and sociology.
