Archive for January, 2010
High Interest Savings Accounts Caveats
Selecting a bank to build and nurture the high interest savings accounts begins with investigating, which banks are safe havens to multiply your savings.
Reputation. As Americans learned from the financial crisis of 2008 through March of 2009, banks are not invincible. As a result, checking a banks financial stability is a vital step to stockpiling the nest egg into a high interest rate savings account. Aside from checking that a prospective bank is insured by the Federal Department of Insuramce Commerce (FDIC), determine if the bank is on the “troubled bank” list.
Security. Many banks offer high interest saving accounts with paperless or online banking. Although many financial institutions tout the use of sophisticated security systems, be sure to determine if the bank has the appropriate measures. safeguarding your personal account information. Also, research how the bank administers lost passwords. Some financial institutions send temporary pass codes via text messages or by phone.
Customer Service. How a bank or financial institution manages customer service conveys a lot about the company. Banks subjecting their customers to a loop of voicemail and few options to communicate with a live human are generally an indication of an institution with inept customer responsiveness. Although many companies outsource their customer service overseas, it seems like a security glitch waiting for a major snafu.
Terms and Limitations. Does the bank require a minimum balance requirement? Are there any monthly fees? Review the small print. Certain institutions such as WTDirect Savings modify the APY within 60 days – if the balance falls under $10,000. Although the APY changes for balances under the minimum requirements, high interest savings rates with these types of terms generally offer a higher yield than similar financial products.
Questions to Ask Before Opting for a High Interest Savings Account
Before you open up a high interest savings account, be sure to ask these questions:
How is the rate of the high interest savings (HIS) account assessed?
From bank to bank, the policies vary. Certain banks allocate different interest rates, depending on the amount of the savings fund. For the consumer, who does not have significant assets, it’s in your best interest to shop around for high interest savings account that is not tied to the sum of the savings.
What are the minimum balance requirements?
Certain banks have minimum balance requirements. For the consumer, who has more than the minimum, the balance requirement is not an issue.
Are there any charges for monthly service fees?
Since the wake of the financial crisis, some banks and financial institutions are charging monthly service fees for “administration” purposes.
What are the penalties for balances falling under the minimum requirement?
It is common for banks, requiring set balances to impose fees on high interest savings account that fall below the minimum. However, a few financial institutions do not charge fees. Therefore, it’s feasible to shop around for an HIS without any fee requirements.
How is the rate of the high interest savings account assessed?
From bank to bank, the policies vary. Certain banks allocate different interest rates, depending on the amount of the savings. For the consumer, who does not have a significant savings, it’s in his or her best interest to shop around for the highest yield for their savings account.
What are the policies for making transfers?
Five to six monthly transfers are the limitations at many financial institutions. Nonetheless, the high interest savings account is not the type of savings vehicle intended for rampant withdrawal transactions.
In case the high interest savings account turns out to be unfitting for your financial situation, be sure to inquire about account cancellations. Some banking institutions charge a fee for closing an account.
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