When our economy seems to disappear overnight, the top savings account rates drop as well. What used to be high percentages are no longer available, unless you have $20,000 or more to invest. So instead of settling for a .3% or 1% rates, it’s a good idea to consider the other options out there.
We understand these alternatives are not for everyone. However, if you realize one of them complements your needs, you should consider using it.
Certificate of Deposit (CD)
The benefits associated with CDs are plentiful. The issue for some people is not being able to access the money if an emergency arises. Keep in mind, long term CDs have much better rates, so it’s basically a double-edged sword. If you’re willing to give up a portion of money for several years, this could be the best choice for you.
Plus, when you have a certificate of deposit, it’s easy to figure out what type of return you’re going to receive. While this number might fluctuate a bit, it’s going to be very close to the actual amount. Any CD will also be FDIC insured. This amount can reach as high as $100,000.
Money Markets
If you’ve contemplated using money markets, it’s definitely different from a certificate of deposit. In this scenario you would open up an account with “X” amount of dollars. The money is then taken and placed into conservative CDs, savings bonds, and various other areas. When money is made, your account is credited.
This can be a monumental benefit if you want to earn more in a shorter period of time. You also don’t have to lockdown your money for a specified period of time. In fact, money market accounts come with checks. So, if you need a little extra cash then it will be available.
Unfortunately, most of the banks out there will only allow a certain amount of transactions per month. This could have a negative effect on several people. The point is, money market accounts are a great choice when the top savings account rates are low.
You Decide
Both of these alternatives can help you build more income while waiting for the top savings account rates to rise again. The best pre-planning strategy is to write out everything you want from your new account. Savings accounts with lower rates still have an opportunity to be beneficial. After all, the goal is to save money and earn something on the side while you build for your future.
When opening a new account, take the time to consider all your options. Even though the top savings account rates are low, it doesn’t mean you have to accept what they’re offering.