Why do most Americans continue to accept earning a few cents each year from their savings account? Because people are still surprised to hear that savings rates have reached new levels in the last two years, and they’re continuing to climb.
Thanks to the government, interest rates could be finally headed above 2 percent. But you won’t get these great higher rates at your local big bank; many big banks offer much lower interest rates. If you want to increase your savings, here’s where you need to start.
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Why Americans Must Go Online
Many of us resort to keeping our savings with a traditional bank such as Chase or Bank of America. Unfortunately, keeping your savings at a large national bank often means you’re leaving money on the table. In fact, it could mean you’re not earning any savings at all!
But if you know where to look, you’ll find that many reputable online banks have much higher rates with some offering rates up to 1.8%
Quick tip: The government is widely expected to increase the federal funds rate this year again. Remember, you’re never locked into a saving accounts, so compare rates with a search now.
As NerdWallet reports, the federal government has raised interest rates to a new high: 2 percent, or 25 times the current national average offered at banks. You would think that big banks would increase their rates as well. But despite this, big banks have barely responded, keeping their rates below 0.10 percent.
Unlike the big banks, online banks are anxious to win your business. These online banks from Capital One to American Express offer all the benefits of traditional brick-and-mortar banks. But they can afford to offer much better rates because they don’t have the high overhead of managing a physical location. Many Americans nowadays likely hardly visit a bank in person, so stop letting your money sit there and do nothing. Try an online bank instead!
More Competition is Coming
The new higher interest rate of 2 percent is a huge boon for those looking to make extra cash off their savings – but even better news lies ahead.
According to The New York Times, the most recent rate hike in June 2018 isn’t going to be the last – the government signaled two more rate increases will happen soon. And with another federal rate increase, banks will start offering even more competitive rates.
So, switching your savings to an online bank could bring even greater benefits in the coming days and months. While 2 percent is a great rate right now, you could see even better interest rates of 2.5 percent or higher. More banks will begin competing to attract customers, offering increasingly better incentives.
How to Take Advantage of This
Money-savvy individuals could maximize their savings by opening multiple bank accounts at different banks. With online banking, the process is so easy and you no longer need to stick with a big regional bank offering pathetic interest below 1 percent.
To get started, do your research online. Search for online banks with higher interest rates than the national average. Make sure to compare different accounts, rates, and financial options to find the best option for your money. And don’t forget to consider multiple accounts in order to prepare for the future interest rate increases ahead.
If you’re interested in finding higher interest rates at online banks, start a search today.