Any expert will tell you that a good investment strategy isn’t merely one or two specific tactics, but a whole slew of various actions designed to increase your wealth. There’s investing in the stock market, retirement savings, IRAs, real estate and more. And though it’s not typically viewed as an aggressive wealth building strategy, even your savings account can be looked at as a long-term investment.
One problem with savings accounts, however, is that you’re often adding and withdrawing from them. Another problem with savings accounts is that the interest rates aren’t usually all that lucrative. In fact, the average savings account interest rate today is only about 0.9 percent, so you’ll either need a lot of money in savings or a lot of patience to see the needle move much when it comes to building wealth via this medium.
The good news is that while a 0.9 percent interest rate is the norm, it doesn’t have to be the exception. More and more banks are upping the interest rate ante when it comes to savings accounts. The only catch is that these banks offering better interest rates aren’t usually your traditional brick-and-mortar entities — but rather online banks. But, a 2 percent interest rate on savings accounts can make it worthwhile to give these more unconventional financial institutions a try.
So what online banks offer the best interest rates on savings accounts? Two of the options that experts seem to favor are Ally and Barclays. These are also two of the more reputable online banking options.
Specifically, Ally and Barclays each offer interest rates close to 2 percent. For context, that’s about $500 you’ll be earning in interest each year if you had $250,000 tucked away in a savings account accordingly. There’s also a couple of nice things about savings accounts compared to other investment strategies, and each of these are both reflective of saving with either Ally or Barclays:
First, there’s no market swings. You don’t need to be watching the stock market to see if your investment is increasing or decreasing when it comes to a savings account. No, savings accounts are nice in that they’re immune to market swings. So unless you withdraw your savings, you won’t be losing money regardless of what’s happening on Wall Street or in the overall economy.
Second, they’re protected. Like savings accounts at traditional banks, savings accounts at online banks such as Ally and Barclays are protected by the Federal Deposit Insurance Corp. It is worth noting that protections usually cap out at a certain dollar amount.
Savings accounts that are opened through Ally or Barclays are nice in that they don’t require any sort of minimum deposit and there are no fees associated with them. The banks also offer other types of banking accounts, like checking, as well.
Marcus is another high-interest savings account bank that you may want to consider. And if you have a lot of money you want to invest in savings, another option is CIT Bank, which offers a 2.15 interest rate. The catch with CIT is that you have to put $100 per month into it or maintain a hefty daily balance to qualify for the rate.
You’ve probably read about the Federal Reserve raising interest rates in the news recently. The bad news is that these increasing interest rates haven’t benefited consumers when it comes to savings. And while the 0.9 percent average interest rate tied to the average savings account might be just fine for many people, there are options out there for those that want to get more return on investment out of their financial assets. Going with a reputable online bank is one of them for those who want to make their savings more of an overall investment.
Regards,
Ethan Warrick
Editor
Wealth Authority
