The interest rates on savings accounts, CDs, and other products are so low that you may wonder if it’s worth having a savings account. After all, why would anyone bother if the interest rate is only 0.15 percent? Is there any point in trying to find the highest-yielding accounts when there are so many options that pay below 1 percent? This article will go over the reasons why high-interest rates matter for your bottom line and how to find them.
The reality of high-interest rates
A high-yield online savings account is only sometimes easy to find. They exist; it’s just that they’re harder to find than you might think. If you’re looking for a high-interest savings account, your best bet is to search online or in person at a bank or credit union. The rates may vary from institution to institution, but most will offer them if requested.
“Lantern by SoFi has helped search some of the top providers and the rates they would currently offer.”
You also have other options besides traditional banks and credit unions regarding high-interest savings accounts.
For example, online banks such as Ally Bank, Synchrony Bank, and Marcus by Goldman Sachs have competitive rates on their online savings products, too—some even exceed what traditional banks offer! These online institutions can be great alternatives if you want more flexibility with managing your money or don’t want any barriers between yourself and a good rate (i.e., having an ATM card).
Why are interest rates so low
Low-interest rates are a result of the financial crisis and the subsequent recovery period. Following the 2008 recession, central banks across the world slashed their interest rates to historic lows to stimulate economies that were dipped in recession. This had two effects: it helped keep inflation under control while also providing an incentive for consumers to invest in goods and services.
Small savings can still add up
The important thing with small savings is to get into the habit of saving. You don’t need to save a lot for it to add up, and even if you just put aside $20 per month, in 10 years’ time, that will grow into $3,000!
You can start with small amounts by moving your change from your pockets into a piggy bank or keeping money in an envelope, so you don’t spend it on impulse. This will help build up your saving over time.
Use high-interest rates as a tie-breaker
But high-interest rates are not the only thing to consider when comparing savings accounts. A high-interest rate is a good thing, but it’s not the only factor. You should also consider the bank’s reputation, security and service.
If you can’t find a high enough interest rate to make switching banks worth it, then think twice before opening another account at all. If your current bank offers lower rates than what you might find elsewhere but has great customer service and convenient locations, then maybe keeping your money there is better than jumping ship for a slightly higher APY (annual percentage yield).
Hopefully, this article has helped you understand how vital high-interest rates are for your savings. You know it can be difficult to find a good rate, but don’t give up! There are still plenty of options out there if you look hard enough.
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