5 Reasons Your Savings Account Is Useless

I received this guest post via email today and thought I would share.

If you have a checking and standard savings account you might think you’re doing pretty well and are being smart and diverse with your money. On the other side of that equation is the tiny interest rate a basic savings account offers making the account itself pretty much useless.

1. You Think You're Already Saving at Optimal Levels

bag of money

Image via Flickr 401(K) 2013

Many people think opening a standard savings account with a small interest rate of 0.09 percent is just fine. In fact, folks like this probably don’t even look at the interest rate—they’re just proud at the end of each year if they’ve managed to save more than they thought they could.

With a high-yield savings account or a money market account, the interest rates are markedly higher—some as high as 0.45 to 0.60 percent. Skipping the normal savings account and replacing it with an account offering a great interest rate that makes you stand up and notice is a much better idea. Bankrate is a great place to research current interest rates for interest bearing bank accounts.

2. You Never Deposit Money Into Your Savings Account

Many who open a savings account start out with good intentions but never make additional deposits. There’s really no incentive to do so other than the little voice inside you telling you to save instead of spend.

Even with online banking and e-deposits which makes it easier to place funds in a checking account, actually doing it is the hard part. With an account that grows through the interest it gains, it becomes more attractive and desirable to pay attention to saving money.

3. It’s Impossible to “Save” in a Checking Account

Even if you have an interest bearing checking account, with today’s economic challenges, it really is impossible to save money in a checking account. We know the money is there and it’s easier to pay for that concert we don’t want to miss or meet the gang on a weekend getaway with a debit card.

Even people (and there are many) who skip balancing their account on a monthly basis and leave a cushion to be safe from overdrafts aren’t saving money, their using that cushion for a what-if scenario.

4. Finding Attractive Savings Accounts Takes Time

With online resources such as Bankrate, it’s easier than ever to find financial institutions offering attractive high-yield checking or money market accounts. In addition, if you really want to save, using the “research is time consuming” excuse might mean you really don’t want to save for future goals.

Beyond Bankrate, there are other ways to stay on top of banking news, trends and finding important info on interest bearing accounts from places such as the FI MarketMinder Twitter page. Researching the best rates is inevitable but pays in the long run—literally.

5. You Think National Banks Are a Hassle

road sign

Image via Flickr 401(K) 2013

This is far from the truth and many national banks offer great customer service. Further, national banks are becoming popular tools to help save money and all of them offer high-yield checking or money market accounts.

It’s easy to file away monthly local savings account statements but when a national bank sends you an email showing you how much interest you’ve gained, it makes it easier to dedicate yourself to saving money.

A standard savings account won’t do much for you—in fact it’s no different than stuffing money into a jar for future goals. Why not revisit how you save and what you could attain and find an account that pays you to deposit money?

Author Bio:

Jean Scheid, a former business owner has researched and written extensively on personal financial health.

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