You work hard for your money, and you want you money to work hard for you. Here are some of the current bank interest rates.
Where Can You Put Your Money?
The bank is the safest place to keep your money, while still earning a small amount of interest on it. When you’re comparing different banks to see where you can get the best deal, keep in mind that most banks offer a variety of savings accounts, all of which have a different interest rate (such as checking, savings, money market and CDs). Within the savings accounts, the rates can vary based on the balance in the account. And don’t forget about online banks. Because they don’t have the overhead of a brick-and-mortar location, some will offer higher rates.
Characteristics of Savings Accounts
Credit unions, regional banks and national banks all offer their own savings accounts. Local banks tend to offer slightly higher interest rates than the larger, national institutions, but the trade-off is the lack of widespread accessibility to a branch and the lack of ability to offer the broad range of service of a national bank. You are allowed a certain number of withdrawals from a savings account per month. Money market accounts work much like savings accounts, but they require you to maintain higher balances and make a high initial deposit in exchange for a higher interest rate. CDs lock your money up for a period of time (generally one to seven years). Generally, the longer the term, the higher the rate of return you’ll earn. Banks will hit you with a stiff penalty for withdrawing money from a CD before its maturation date, so be careful when choosing this option.
Current National Averages
According to Bankrate, here are the current national averages for savings accounts (per year yield) as of 2019:
- Checking accounts: 0.08 percent
- Savings: 0.10 percent
- Money market accounts: 0.21 percent
- One-year CD: 0.88 percent
- Two-year CD: 0.94 percent
- Five-year CD: 1.44 percent
Benefits of Savings Accounts
Savings accounts provide a safe place to hold your money, whether to have in case of an emergency or to have cash on hand for needs down the road. Savings accounts should be thought of as effective as a place to hold your money rather than to earn interest. Most savings accounts are liquid, meaning you can pull your money out at any time without penalty.
Drawbacks of Savings Accounts
There are a few drawbacks to consider when looking to place your money in a savings account. Local banks may have limited services and not many branches beyond your neighborhood. Regular savings accounts yield low interest rates. You cannot get a personal connection from an online savings account. Money market accounts require you to keep a higher balance compared to other savings accounts. CDs have the penalty of time. You have to keep your money put or else incur a large early withdrawal fee.
