subject: Taking Full Advantage of an Online Savings Account [print this page] Taking Full Advantage of an Online Savings Account
If you have looked around at saving account rates, fees and terms then you may have found that online savings accounts are the best place to make the most out of your saved dollars since these types of accounts typically offer higher interest rates than traditional banks. But if you open one of these accounts, there are some things that you should do to help maximize the interest rate advantage you are enjoying.
1. Deposit money weekly.
Your online savings account will earn interest on its balance on a daily basis. If you leave money in your regular checking account in order to make savings account deposits every month then you will be missing out on interest that you could be collecting between deposits. Instead, deposit your extra money into the savings account every week so that it is earning money as soon as possible.
2. Set up automatic transfers.
It is easy to forget to make a savings account deposit. It is also easy to spend the money from your checking account before you move it into your savings account. That is why setting up an automatic transfer is so important. With an automatic transfer of funds from your checking account to your savings account you can remove the money before you even realize you have it, thereby lessening the likelihood of spending it. In addition, the deposit is never forgotten when it is set up to occur automatically.
3. Don't spend the money you save.
When you deposit money into your savings account, the only thing standing between spending the money and saving it over the long run is you. You must remain disciplined and leave the money untouched. Not only will this help it grow faster and earn more interest but it will also help you to avoid any charges your financial institution might impose for excessive withdrawals.
4. Don't use the account for overdraft protection.
As mentioned in step 3, spending money from your savings account is a slippery slope that could result in account depletion and charges for excessive withdrawals. In order to help avoid this, make sure you do not allow your savings account to be used for overdraft protection. By balancing your checkbook regularly and spending only those funds that you know are available you can avoid the need for overdraft protection entirely. Secondly, you can choose to have your transactions declined when you go over your available balance, rather than pulled from your savings account. This will help you avoid excessive withdrawal charges, lost interest earnings and overdraft charges.
If you follow these steps, you will have the best chance to take full advantage of all the benefits of having an online savings account.
If you have looked around at saving account rates, fees and terms then you may have found that online savings accounts are the best place to make the most out of your saved dollars since these types of accounts typically offer higher interest rates than traditional banks. But if you open one of these accounts, there are some things that you should do to help maximize the interest rate advantage you are enjoying.
1. Deposit money weekly.
Your online savings account will earn interest on its balance on a daily basis. If you leave money in your regular checking account in order to make savings account deposits every month then you will be missing out on interest that you could be collecting between deposits. Instead, deposit your extra money into the savings account every week so that it is earning money as soon as possible.
2. Set up automatic transfers.
It is easy to forget to make a savings account deposit. It is also easy to spend the money from your checking account before you move it into your savings account. That is why setting up an automatic transfer is so important. With an automatic transfer of funds from your checking account to your savings account you can remove the money before you even realize you have it, thereby lessening the likelihood of spending it. In addition, the deposit is never forgotten when it is set up to occur automatically.
3. Don't spend the money you save.
When you deposit money into your savings account, the only thing standing between spending the money and saving it over the long run is you. You must remain disciplined and leave the money untouched. Not only will this help it grow faster and earn more interest but it will also help you to avoid any charges your financial institution might impose for excessive withdrawals.
4. Don't use the account for overdraft protection.
As mentioned in step 3, spending money from your savings account is a slippery slope that could result in account depletion and charges for excessive withdrawals. In order to help avoid this, make sure you do not allow your savings account to be used for overdraft protection. By balancing your checkbook regularly and spending only those funds that you know are available you can avoid the need for overdraft protection entirely. Secondly, you can choose to have your transactions declined when you go over your available balance, rather than pulled from your savings account. This will help you avoid excessive withdrawal charges, lost interest earnings and overdraft charges.
If you follow these steps, you will have the best chance to take full advantage of all the benefits of having an online savings account.
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