People these days don’t seem to be giving much attention to the savings accounts that they choose to store their money in. Why would they? Banks these days are giving next to nothing when it comes to interest rates. Some are so low that they have to go out to three decimal places just so that they don’t have to claim that you’re getting 0% from keeping your money with them.
It used to be that banks would give you a reasonable amount of interest when you kept your money in savings with them. After all, you’re giving them the money to do what they please while you’re not using it, as long as they can give it back you when the time comes that you need it back. With very little creativity they should be able to get at least 7% return annually. That’s the expected ROI when you invest in a standard S&P 500 index fund.
It makes me wonder why as Americans we are so content with the savings accounts that why have. Why do we let people have custody of our money without getting anything out of it? Inflation rates these days are about 1.3%, so if you’re not getting this much interest on your money in a bank account then your money is withering away as it sits there. It’s not good, and we really need to do something about it.
Luckily there have been some online savings accounts that have been offering higher interest rates these days. Their harder to come by and they’re few and far between, but their out there. You have to look and make sure you’re finding something that makes sense for you.
Just because a bank is conveniently located, or it has low ATM usage fees or whatever they may be offering today does not mean that you should put up with a low interest rate. You need to have an interest that matches inflation at the very least, unless you’re totally OK with literally giving your money away.
There are other ways that you can actually accelerate the growth of your money too. I’m not going to get into them because I am not a financial advisor and I don’t want to be giving unfounded advice on the internet, but suffice to say that there are other places to store your money apart from banks. If they simply aren’t giving you interest you’re probably burying your cash in coffee cans for the next time the apocalypse comes around.
So, if you’re in the unfortunate situation where you’ve signed up for one of these savings accounts where you’re getting essentially nothing for letting someone borrow your money I suggest you do one of two things. Option A – negotiate with the bank you’re currently using. This is probably a losing battle. Option B is to find a better bank, and there sure are plenty of others out there.