A savings account is a safe place to put your money, but if you’re not earning interest, then it’s only a little better than your mattress or piggybank. It sounds simple enough to earn money on a savings account; just put your money there and leave it. But earning interest isn’t so effortless.
Compare Interest Rates
Traditional brick-and-mortar banks usually offer very low interest rates on savings accounts. Interest rates so low that even a deposit of several thousand dollars only earns a few dollars of interest a year. If you want to earn a more competitive interest rate on your savings, you’ll have to take a look at high yield savings accounts from online banks. These banks are known for offering more competitive interest rates on savings accounts.
Look for an Account With No or Low Fees
The money you pay in savings account fees could be earning interest. Though it’s just a small amount, every little bit counts when you’re trying to earn interest on your savings accounts. There are plenty of savings accounts with good interest rates, that don’t charge a monthly or annual account fee.
Don’t Touch the Money
You’ll earn more interest on your savings if you just leave the money in your account untouched. Because of the beauty of compounding interest, the interest you earn on your balance will also earn interest, giving you the ability to earn more money than an account that charges simple interest. When you’re shopping for a savings account, make sure you choose one that calculates compounding interest.
Build Your Balance
Making regular contributions to your savings account will help you build a bigger balance and earn more interest. You can set up an automatic transfer from your checking account that falls in line with your weekly, bi-weekly, or monthly payday. Having the money transferred automatically removes the extra step that keeps many people from saving money.
If you’re saving up for a big expense, like your annual tax bill or semi-annual insurance payment, put the money in your savings account rather than letting it accumulate in your checking account. Since you won’t need the money for several months, it will have an opportunity to earn interest before you need to spend it.
Deposit the cash rewards you earn from a rewards credit card or rewards checking account. Normally, you’d be inclined to spend this money, but instead, reward yourself, by putting it in savings and letting it earn interest.