High Interest Savings

Archive for March, 2010

As the stock market continues to show the vital signs of recovery, some consumers are tempted to dabble in the market. Caution is advised. Some financial analysts advise clients not to place all their savings on Wall Street. High interest savings accounts are other financial tools, which yield an honest return.

While some analysts laud certificates of deposits, there are a few  drawbacks. For instance, a short term CD rate generally accompanies ultra low interest rates, presenting a better return with a high interest savings account.

While a long term certificate of deposit assures an investment return, the accountholder is not supposed to touch the funds for a specified period. Depending the bank, there are specific guidelines and penalties for making withdrawals.

For the frugal saver, who has the discipline and does not mind not having access to their funds for a 4-year commitment, some CDs accompany a higher rate.

Alternatively, if inflation gains traction, maintaining funds in a CD may not be the smartest choice. 

Flexibility is what makes the high interest savings account so attractive. Many certificates of deposits require accountholders to issue withdrawal requests by mail or in person. With the autonomy to withdraw or access funds at anytime, the high interest savings account possesses many redeeming qualities over the certificate of deposit.

• Up to six monthly transactions (includes withdrawals)
• Pure liquidity (an ability to access funds at any time)
• Online banking convenience
• Nominal service fees

Click on high interest savings

High interest rate savings accounts and certificate of deposits are two financial vehicles, which offer different advantages. The high interest rate allows the accountholder the autonomy to make withdrawals from the investment from time to time. Meanwhile, certificate of deposits are designed to stock away, featuring inflexible investment withdrawal guidelines.

Unlike the fixed rate certificate of deposit, which takes longer to mature and does not  have the monthly withdrawal features of the high interest rate savings, some financial analysts recommend a liquid certificate of deposit, where certain funds are d

However, since many high interest rate savings accounts share some of the same features as the certificate of deposit, compare the following: 

• The APR
• The minimum balance requirements
• Transaction fees

For example, Discover card offers both a CD and high interest savings account; however, the APR is a  quarter percent higher on the certificate of insurance than the high interest savings account. Generally, CDs have a higher yield than high interest savings accounts.  

Be sure to compare the high interest rate savings at well known institutions, such as: 

• Discover
• AIG
• American Express
• Bank of America
• Capital One
• HSBC

Additionally, be sure to shop  around for the best high interest savings account. Most accounts include the following features and requirements: 

• Up to $250,000 per depositor, per account Insured by the Federal Deposit Insurance Corporation (FDIC)
• Has a direct deposit
• Allows up to six maximum withdrawals per statement cycle.
• Interest is compounded daily and accrued on a monthly basis.
• Returned deposits  due to insufficient funds carry a $5 surcharge 

Unlike the certificate of deposit (CD), which imposes a penalty for withdrawals prior to maturity of the CD that can ultimately lead to loss of the deposit,  a high interest savings account does not accompany any  of these stringent rules. Nevertheless, the high interest rate savings account is ideal for the consumer, who has the discipline to limit withdrawals.