If the theory behind getting rich bit by bit could be summed up in two words, they would be these: save money. And what better way is there to save money than to put it in a bank account? When used prudently, bank accounts can help your money grow. On the flip side, when used unwisely, they can deplete your finances. Here are some tips for putting your money to work by putting it in the bank.
Choose an Ideal Savings Account
We can use banks to keep our money safe and secure. The idle money you put into a savings account will earn interest. How much interest? The average is between 2% and 4% annually, with compounded interest.
Don’t Let Checking Account Fees Eat Your Money
It’s discouraging to put your hard-earned money into an account, only to watch it dwindle because of ATM fees, debit fees, monthly use fees and other nickel-and-dime charges. Some banks charge you money in a sneeze. And then there are those that offer free checking, free ATM and debit card use, and no monthly payments. Check out several banks before you set up a checking account.
Also, ask about overdraft protection. Some banks offer it for free. If you ever write a check or make a debit when your account has insufficient funds, the bank will cover the transaction so that you don’t wind up owing bounced check fees to assorted vendors. But take note that you will still be responsible for the bank’s overdraft coverage fees, which can cost as much as $35 per transaction! Keep careful track of your purchases to avoid throwing your money away on these fees.
Certificates of Deposit & Money Market Accounts
Depending on your goals, a savings account might not be your best option. For example, if you want a low-risk investment that returns a good amount of interest, check out Certificated of Deposit (CDs). The only drawback is that you have to commit your money for a designated length of time – typically three months to five years. The longer you leave your money in a CD, the better off you’ll be when it’s time to cash out. CDs are FDIC insured up to values of $100,000.
If you’d rather have swift admittance to your money, mull over a money market checking account. These accounts return a higher rate of interest than regular savings accounts. Some banks require a minimum deposit to open money market accounts, and there are typically limits on the amount of withdrawals you can make each month. Banks are a sheltered spot to keep your money, and they tender services that help you make the most of your money. Go online to compare bank rates and find the best savings account for you.