There are so many different types of savings accounts available today that is can be hard to keep track. Unfortunately, many people are accessing the wrong type of savings accounts. You could be earning serious interest with the right savings account. I mean, you could actually be getting paid to save. So let’s dive into what traditional savings accounts are paying compared to a better savings account that will actually make you money.
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The problem with traditional savings accounts
A traditional savings account is most likely what you will find at your local bank. These types of savings account can be helpful to have especially if it links to your checking account.
Some banks will even lure you in with overdraft protection plans. If you spend too much money in your checking account, money from your savings will automatically transfer so you can avoid any overdraft charges.
Of course, your local bank is going to make you believe in all of the benefits they offer, but the truth is, most savings accounts aren’t paying you more than .1% in interest.
When traditional savings accounts are helpful
The only time I really recommend having traditional savings account affiliated with your regular bank is when you need your $1,000 emergency fund on hand or if you are saving for something small, like vacations. –Even then, I think there are better ways to go.
Traditional Savings is best for:
- People who need an over-draft back-up
- Saving for sinking funds
- Easy access into checking accounts
What other savings options are available?
What so many people don’t know is that there is a huge variety of online banks that are offering interest rates nearly 200% more than your traditional local bank.
These are often Money Market Accounts or a unique savings account offered through a particular bank.
200% savings increase
When you hear that you could be earning around 2% interest on your savings, it may not sound like much, but consider that if you are currently earning less than .1%, this is nearly a 200% increase in interest! That’s huge!
Let’s take a look at a hypothetical savings of $100 per month.
Here’s a quick chart to show potential growth over a 10, 20 and 30 year period.
How much money are you making?
So you can see this chart, and see that in 30 years, saving only $100 per month with the Savings Builder, you will be sitting at close to $60,000 saved.
But how much of that was “free” money made from interest?
$14,832 of interest was earned with the Savings Builder compared to $546 with a traditional savings account!!
That’s over a $14,000 difference in free money earned! This is why it is so crucial not to underestimate what drastic changes upping your interest rate can do for you!
Best high-interest savings accounts
So what are the best high-interest savings accounts available online as of September 2019? Let’s take a look at three of the best options.
Why online only?
There are more online banks that offer similar interest rates and have great features like ATM and debit cards.
One of the main reasons I’m not highlighting some of these options is that for people who struggle to save, having things like debit cards or ATM options can make it nearly impossible to save money.
Why a minimum monthly deposit might be better
When looking at these, it’s easy to get swept away with the highest interest earner at 2.52% and I get that. Vio Bank is a great option to build savings as is HSBC bank that also requires no minimum monthly fees.
So why did I put CIT Bank in there with a $100 minimum monthly deposit?
Because frankly, most people STINK at saving!! You will never reach that $60,000 worth of savings unless you are actually saving that $100 per month!