You could be getting a lot more interest on your savings account
If your savings are earning 0.01% or so, talk of rising interest rates probably seems like a fairy tale. It sounds nice, but you might sooner meet a talking animal or two.
Dugan chose the account offering the best rate at the time, and says that the bank has raised his rate twice in the past month alone.What’s the best rate out there? The online bank or credit union offering the best rate changes from week to week — but any of the top contenders will earn your balance much more than it would get at most bricks-and-mortar banks.
Is that rate permanent? Savings rates are variable, meaning they can increase or decrease. Rates have been rising recently, but that won’t last forever. That said, online banks and credit unions typically pay better returns than bricks-and-mortar ones. At $1,000, a 2.3% account will earn you about $23 in a year. At $10,000, that’s about $230. And the next year, you’ll earn based on $10,230 — as well as anything else you’ve saved.CDs often require more money to open and their returns are more predictable. For example, if you put $5,000 in a five-year CD that earns 3.10%, you’ll end up with over $800 more than you put in.
Are there any downsides to online accounts? Online banks and credit unions are just that — online. Most don’t have bricks-and-mortar locations. Dugan sees this level of accessibility as a perk — he says he’s not tempted to touch his balance — but it can take longer to withdraw money when you do need it.
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