Recession Proof Living

Getting frustrated looking for a fixed rate savings account with decent interest rates? You’re not alone. With rates hovering around 1.25% for basic passbook savings, many savers are wondering whether it’s worthwhile to open a separate savings account. A basic internet search will reveal some excellent-sounding rates, but you want to be sure and understand the terms of the account before you commit. 

The Federal Citizen Action Center offers the following tips for finding a good savings account.  When choosing the one that is right for you, consider:

• Minimum deposit requirements. Some accounts can only be set up with a minimum dollar amount. If your account goes below the minimum the bank may not pay you interest on the money you deposited and you may be charged extra fees.
• Limits on withdrawals. Can you take money out whenever you want? Are there any penalties for doing so?
• Interest. How much (if anything) is paid and when: Daily, monthly, quarterly, yearly? Is this a variable rate or fixed rate savings account? To compare rates offered locally to those from financial institutions around the nation, visit www.bankrate.com
• Deposit insurance. Make sure your bank is a member of the Federal Deposit Insurance Corporation. This organization protects the money in your checking and savings accounts, certificates of deposit and IRA accounts up to $250,000.
• Credit unions. A credit union is a nonprofit, cooperative finacial institution owned and run by its members. Like the FDIC does for banks, the National Credit Union Share Insurance Fund (NCUIF) insures a person’s savings up to $250,000.
• Convenience. How easy is it to put money in and take it out? Are there tellers or ATM machines close to where you work and live? Or would you receive most of your service via the telephone or Internet?

Also, don’t forget to check out your local credit unions. They often offer the best rates around, and have great customer service to boot.  Remember to look into high interest checking accounts as well. These tend to have many strings attached, such as requiring you to use direct deposit, a minimum number of debit card purchases per month, and a cap on the amount of money that can earn interest. However, if you’re doing all those things already, you may find that your best fixed rate savings account is actually a checking account. Happy saving!