Shopping for savings accounts is a lot like shopping for groceries. Sometimes you need to find the right coupons so that you can get the most bang for your buck. While there are no actual coupons for online savings accounts, there are various “virtual coupons” in the form of promotions and deals to entice consumers. Though most people trust traditional banking institutions with their money, moving your savings to an online account can help you get the most competitive interest rates on the market. So, let’s look at a few tips to use “virtual coupons” and find the best online interest rates!
Look for Deposit-Based Deals
A lot of “virtual coupons” come in the form of savings accounts with high minimum deposits. While these may be out of reach for some, they offer a great deal for those who can afford them. Typically, the more you can deposit when you first open your account, the higher the interest rate you will receive. This, in turn, will allow your money to grow even faster. So, look out for online banking institutions that offer higher APYs for people who can deposit a certain amount of money from the start.
Look for Promotional Interest Rates
Just like traditional grocery coupons, savings accounts require you to read the fine print. In some cases, you can only access high interest rates if you sign up by a certain date. If you miss the deadline, you could end up missing out on really great returns on your savings. So, be sure to shop around for promotional deals that don’t come around often!
Look for Low-Fee Savings Accounts
Often times, an online savings account may look great on the surface, but it turns out to be less than ideal in practice. This is often due to hidden maintenance fees that take a huge cut out of your interest. Fees can end up negating your gains and putting your savings growth at a virtual standstill. To avoid these fees, be on the lookout for savings accounts that advertise “zero annual fees.” Additionally, be sure to read user reviews to find out if these “zero-fee” claims are actually true.
Research Average APYs
At the end of the day, your savings account APY (Annual Percentage Yield) is the most important factor to consider. Typically, online savings accounts through non-traditional online accounts can offer higher APYs because they don’t have as much overhead as a traditional banking institution. Either way, you’ll need to shop around to see who is offering the best APYs in 2020 and beyond.
Avoid APYs That Are Subject to Drastic Change
As of 2020, the average savings account interest rate (APY) is a mere 0.09%. To put that figure into perspective, 0.09% means that you could expect to make about $0.90 in interest if you put $1,000 in your account for one year. Naturally, this means that you should avoid low interest rates, but it also means that you should avoid interest rates that are subject to drastic change.
Unfortunately, economic factors can affect interest rates, causing your savings account APY to get better or worse. However, many online savings accounts offer APY guarantees, which ensures that your APY will not drop below a set percentage point over a certain period of time. Whenever possible, try to find high APYs that are likely to stay high for the foreseeable future.
The Bottom Line
Just like the changing of the “traditional” supermarket, saving accounts have become more accessible online. Interest rates change from year to year, so it can be hard to figure out the best time to open your savings account. That said, moving your savings to an online account can help rate chasers get the most bang for their buck. Additionally, following the tips above will help ensure that you’re growing your wealth with minimal fees and risks!