Walk With Money » Savings Account

Savings Basics: How to Get Started with Savings Accounts

Robert Wilkinson — Thu, 08 Jul 2010 16:20:03 +0000

One of the keys to financial freedom is developing a habit of saving. It sounds really basic, but many people have trouble with this, and many just don’t know how to start. Here is an overview of how you can get started with savings accounts. The article will cover types of savings accounts, how to open one, and various alternatives that you can choose from.

Photo via Wikimedia Commons

Types of Savings Accounts

There are different kinds of savings accounts. One of the main considerations is the yield you can get on your money. The bank pays you interest — expressed as annual percentage yield (APY) — since the money you deposit is used to fund loans out to others. Rates are influenced by the Fed Funds Rate, and right now, most cash products have low yields, since the Fed rate remains incredibly low. When the Fed begins raising rates, yields on savings accounts should head higher as well. Of course, the bank loans out the money at a significantly higher rate than you are earning, so it makes a profit.

The type of account you choose can influence the returns you get for your money. The main types of savings accounts are as follows:

Traditional Savings Account: For the most part, this is the account you will get when you go to a brick and mortar bank and ask to open a savings account. This type of account generally offers the lowest yields, less than 1% in most cases right now. However, there are rarely minimum account balance requirements, and often no fees are charged.
Money Market Savings: You can usually get a better rate than a traditional account if you consider a money market savings account. Unlike traditional accounts, some money market accounts will allow you to write checks from the account. However, you are likely to have a minimum balance requirement in order to avoid a fee.
Online Savings Accounts: Technology has made it possible for many banks to operate almost entirely online. Many of these banks offer higher yields (around 1.5% to 2% at this time). Additionally, many brick and mortar banks have online accounts that offer better yields than their more traditional offerings. It might be worth it to consider one of these from the standpoint that it might be a little more difficult to access ...

Why You Should Be Reinvesting Dividends

Robert Wilkinson — Tue, 16 Mar 2010 07:20:45 +0000

I’ve been investing in a few dividend stocks lately because savings account rates have been pretty abysmal. The prospect of earning a percent or two on my money is great for an emergency fund but lousy for anything long term.

One of the important ideas behind dividend investing is that you should reinvest the dividends if you don’t need the income. Public companies offered dividend reinvestment plans, or DRIPs, that let you buy shares directly from them and have your dividends reinvested for free. Nowadays, many brokers offer this service for free and I take advantage of them.

However, just because everyone says it’s a good idea doesn’t make it a good idea. Why should I reinvest my dividends?

The main argument, as far as I can see, for reinvesting dividends is because you get to dollar cost average additional shares at no additional cast, assuming your broker offers free dividend reinvestment (and many do). It’s recommended that you reinvest dividends because it lets you buy more of a company you had confidence in at absolutely no cost.

You still ...

Sallie Mae Bank Review

Robert Wilkinson — Fri, 12 Mar 2010 01:20:44 +0000

Sallie Mae, normally known for their federal and private student loans, is entering the savings account area with a high yield savings account currently offering 1.35% APY with no monthly fees and no minimums. It’s your standard online bank offering with a pretty standard savings account rates. In scanning their list of offerings, the only thing that stands out is their 10% bonus for Upromise earnings, which can be substantial if you’re a big user of Upromise.

Why Sallie Mae?

I’ve been racking my brain to come up with an explanation of why Sallie Mae has started to offer banking services and I was at a loss until I remembered one key insight – most consumers, until recently, were completely unaware of high yield online banks. It wasn’t until Ally Bank made front page news that online banks started to get respect and awareness for your average consumer.

It’s easy for “us,” readers and producers of personal finance blogs, for us to forget that because we get a daily dose of it. If you mentioned “reward checking accounts” to some of your friends, I bet you’d see some puzzled looks. Ultimately, I think Sallie Mae is leveraging their connection with students and parents to bring even greater awareness to the consumer.

Upromise 10% Bonus

If you use Upromise, you can get a 10% annual match on your earnings if you satisfy these conditions:

You ...

Related Searches:
review of sallie mae savings account

ETrade Bank Savings Accounts now by Discover Bank?

Robert Wilkinson — Wed, 10 Feb 2010 02:20:06 +0000

Just got this e-mail from regarding my ETrade Bank online savings account:

We are writing to let you know that your E*TRADE Bank account referenced above will soon be transferred to Discover Bank, and become a Discover Online Savings Account. This follows our plan to focus more exclusively on providing optimal investing solutions to our customers. We expect the transfer to occur on or about March 7, 2010.

Discover Bank sounds okay from what I’ve read, and the APY on my whopping 3 cent balance will go up from 0.50% to 1.35% APY, but the only reason I kept the E*Trade account around was for its speedy funds transfers. I don’t use any ETrade brokerage services since they are too expensive and the phone hold times are too long. (I do enjoy the commercials, though.) Time to close the account?

Savings Accounts vs. CDs: Where to Keep Your Money in 2010?

Robert Wilkinson — Fri, 22 Jan 2010 07:20:07 +0000

If you’re a savvy investor, you most certainly have a fair bit of cash tucked away for general spending and emergencies. The stock market is a long term investment and if 2009 taught us anything, it was to not have money you need to spend in the stock market. So where do you put the money you don’t want in the stock market?

There’s 3 main options to place your cash and get it FDIC insured for up to $250,000.

You can put your money in a checking account where you have fast and easy access to funds.
You can put your money in a savings account where you can take money out and put money in while still earning interest on your funds, or
You can put your money in a certificate of deposit, which typically has higher yields than savings but your money is locked into the account for the agreed upon term.

So where should you put your money? Well all 3 of course.

For money that you plan on spending you should keep in a checking account. It’s the easiest account to get money into and out of so it makes sense to keep spending money in it. You shouldn’t keep more than you need to however because you don’t get a return on your investment in a checking account.

This is where savings accounts and certificates of deposit jump into the picture. Your strategy becomes more complicated now because of the fact that you must lock in a rate when opening a CD.

So what is the best cash strategy for 2010?

If you pay attention to CD rates you know that they’re at the lowest levels since the 80s right now. So it doesn’t make much sense to lock in to a long term CD right now because they’re bound to increase when the unemployment rate drops and the Fed decides to raise interest rates. So there’s 2 main strategies you should consider. The first is to convert any maturing CDs you have into savings accounts.

The yields on savings accounts are not that much lower than what banks are offering on CDs so there isn’t that much incentive to lock in your money. You could keep your extra cash in savings accounts which will leave you ready to jump on a CD when rates start climbing back up. Just make sure you stay under the ...

Are You Saving For Your Child’s College Education?

Robert Wilkinson — Mon, 04 Jan 2010 23:20:28 +0000

By Silicon Valley ...

Are you worried about savings account rates and whether your investments are keeping up with your financial expectations? That perhaps your money isn't stretching far enough to fund some of your future financial goals? Well you're not alone. There is one financial goal in particular, that looms heavily upon those of us with children: increasing costs tied to the call of higher education and college.

Lately, the issue of higher tuition rates has occupied the news; we heard of the disruption that took place at U.C. Berkeley when regents announced rising fees in the horizon. It can't be helped really -- it's one of those things that will hold true just like death and taxes do: rising college costs have always been a rite of passage for all of us -- parents and kids alike! (Check out our College Financial Aid How-to Guide for ideas on how to deal with the rising cost of higher education.)

But I'd like to bring up the notion that perhaps not all parents are intending to save for their children's education. No, they've decided not to set up that Coverdell ESA with an online stock broker or mutual fund company. There may be various reasons why this is the case and it's something I'd like to explore a little; I'd also like to determine how some well-meaning families are coping with the pressures of paying for college.

7 Reasons Why Parents May Decide Not To Save For College

I am making these points mainly to elicit discussion. But do you know anyone who has decided not to save for college? And if so, why don't they? I thought about it a bit and came up with a few possible reasons (or "excuses"):

1. You feel that you don't have enough resources.

A common reason for not saving for college is that you just don't have enough money to fund competing financial goals. The rule of thumb here is that you should first fund your retirement accounts before you contribute to your child's 529 college savings plan. The reason? It's more important to ensure that you take care of your own future to avoid having others worry about you in your old age. Your kids can qualify for financial aid, but it will be tough for you to handle any shortfalls in your retirement years if you don't have the means or the savings to live on. Now if financial resources are the issue for you, you may be assured by the knowledge that there are easier ways to get others involved with your savings goals: perhaps an avenue like a 529 account or a free savings account like SmartyPig that allows others to help contribute to your goals may be helpful. It's something worth checking out.

2. Some kids are independent and make their own decisions.

I believe that not everyone is necessarily cut out to go to college. It's also often the case that people in the cusp of adulthood will feel that they aren't ready to enter college at a certain point in their lives. Of course, they may always change their minds later, and that's something that they can decide for themselves. Now there are kids that only need a little motivation to be able to make it through school. ...

Bank Accounts: When More is More

Robert Wilkinson — Tue, 22 Dec 2009 23:20:06 +0000

The bad old days

I’m old enough, barely, to remember a time when most people had only two cash accounts: a checking account and a savings account. They were basically the same, except that the checking account let you transfer money to another person by writing on a little rectangular sheet of paper. This was so long ago that I can’t even remember what they called those things.

Schmecks, was it?
Back then, if you wanted to open a new account, you had to walk into the branch and sit down at a desk. If you wanted to set up an automatic monthly transfer between accounts—if your bank even offered such a service—you had to fill out paperwork. If you wanted to transfer money between accounts at different banks, you had to write yourself a schmeck or pay a wire fee. And if you had accounts at different banks and wanted to see them all at once in a single interface? Here, pal, take your free thermos and get out of my bank.

Yes, the good old days really sucked. Luckily, we don’t live there anymore, and we shouldn’t bank as if we do.

I have an emergency fund. A vacation account. A medical account. ...

Debt Warning Signs and How to Get Out

Robert Wilkinson — Sun, 08 Nov 2009 23:20:20 +0000

Over the previous decade, an insane amouf financial debt has been wrd up. Household debs substantially eaten up a slice of private income because about the mid 90s. Here are 4 clues that you are carrying too a lot financial debt:

Clue 1 - Your financial debt to income ratio is too higher. Your financial debt to income ratio is calculated by dividing your financial debt on a monthly basis by your monthly income. If your financial debt to income ratio is 15 percent, 20 percent or worse, you are definitely in difficulty in accordance to most credit counselors.

Clue two -

Clue three - You are more than the restrict on your credit cards. Straying more than isn't poor unless of course you're not paying it off right away. If you are carrying a significant balance from month to month, you have a issue that needs to be stopped now.

Clue four - You find your self worrying about your financial debt. If you are stressing about your expenses or your financial debt, then it is distinct that you have a issue, plain and easy.

Here are 4 suggestions that will assist you get out from beneath your financial debt.

Tip 1 - Prioritize your Expenses and your Debts. Create down how a lot you owe to every of your monthly expenses and prioritize this list. Give priority to well being, food and shelter, simply because these are the expenses that need to be compensated first and foremost.

Tip two - Quit using your credit cards and spend with money rather. Cut them up, freeze them in ice or feed them right into a wood chipper. Quit relying on credit to solve your problems simply because it is not going to assist you, but rather will only make issues worse. Restrict your self to money if you want to manage your spending.

Tip three - Set up a strategy that will permit you to pare down your financial debt. Call creditors to find out if you can get decrease rates, or to have fees waived. Try to set up a much better payment strategy if you can. Most creditors are more than prepared to work with you but you completely have to work the courage up to ask if you want to get results. When you spend down your credit card financial debt, target the highest interest rates first and then work to the next highest, and so on and so forth.

Tip four - Get assist as quickly as you know you need it. There are credit counseling solutions out there that can sit down with you and counsel you on your spending habits, assisting you create a repayment strategy for your financial debt that is inexpensive and workable. Choose a service that is totally free or inexpensive if you need assist, and formulate a strategy that will make paying your debts down simple and inexpensive with out bogging you down with more expenses or more financial debt.

Picture Credit: 1

Initially posted 2008-11-10 05:08:37. Republished by Weblog Publish Promoter

Associated Posts

Sunday Money Madness - Weblog Action Day Edition Wealthy Credit Debt Mortgage is starting off the roundup by presenting the wonderful finance bloggers that have participated in Weblog Action Day on October 15th, 2008. It's great to see so many out there contributing funds and writing towarhe problem of poverty and increasing globalreness. Did you do......

Related Searches:
mooneydebt@gmail com

What To Do When Your CD Matures

Robert Wilkinson — Fri, 23 Oct 2009 00:20:47 +0000

We put our emergency fund into a CD ladder and every month one of those certificates of deposit matures and is automatically renewed. As an added bonus, ING Direct, where our CDs live, gives us a CD rollover bonus whenever we renew (currently the bonus is 0.15% on CDs of at least 12-months long). For us, the decision is simple. It’s a CD ladder and you simply renew the CD each month for the 12 month term.

What if you’re money isn’t in a CD because it’s part of a CD ladder, what should you do?

My goal is always to maximize the interest rate while minimizing my headache. Our CD ladder isn’t at ING Direct because they offered the best 12 month CD rates (though they currently do, especially after you factor in the rollover bonus or the new money bonus), it’s because it was the simplest online savings account available when we set up the ladder.

1. Decide whether you ...

The Total Money Makeover: Pay Off the Home Mortgage

Robert Wilkinson — Sat, 01 Aug 2009 17:20:13 +0000

This is the tenth of twelve elements of a “guide club” learning and discussion of Dave Ramsey’s >>>>The Complete Cash Makeover<<<<, exactly precisely whe ts bo ofinancia drection is teased apart and looked at in detail. This entry covers the eleventh chapter, finishing on page 202. The subsequent entry, covering the twelfth chapter, will appear on Wednesday.

>>>><<<<This is a stage that I see us approaching as time goes on. We’re not faierbut, but wffrehu Right now, I’m attempting to knock out my last student mortgage (it’s a dooz athen start focusing on my house mortgage.

Our house mortgage payment is just shy of $one,00 - that doesn’t consist of homeowners’ insurance coverage coverage and taxes, so when we get the house compensated off, we now have $one,00 much more a month to make investments on whlly we choose.
I, for one, would roll that additional amount directly into monetary financial savings. I’d merely alter the automated payment to be an automated transfer into a monetary financial savings account of some type - maybe an index fund. Then I just maintain residing existence as regular till one day that account is complete of cash for some element great. For us, that “some element great” is our lengthy-dreamed-of house in the nation, with a little barn out back again again again, a large backyard, and a chicken coop.

Is It A Insane Goal?
My mom and father lately completed offr house mortgage subsequent getting to spend on it for thirty many years. They’re fairly a great offer monetary financial debt totally free at this stage for the preliminary time in their marriage. So, for me, I have a great instance in front of me that you can get rid of all of your monetary financial debt. Nonetheless, numerous individuals don’t have that instance and it seems like an unattainable objective. On page 186:

At any time I speak about getting to spend off mortgages, individuals give me that distinctive appear. They believe I’m insane for two elements. one, most individuals have misplaced their hope, and they don’t truly believe there is any chance for them. Two, most individuals believe all the mortgage myths that have been spread.

The “hope” element is some element I see popping up more than and more than once much more when I speak to individuals about cash. Many individuals I speak to watch their mortgage as merely a fact of existence. If they had been really in a location that their mortgage grew to turn out to be truly easy to invest, it wouldn’t be time to double-up on the payments - no, no, it would be time to upgrade their homes.

I believe this elements to a prevalent mindset out there when it arrives to monetary financial debt. Many individuals merely watch monetary financial debt as a way to leverage the way existence they want nowem>. It arrives fm a lack of persistence - peoe don’t want to reside in a little apartment viewing their monetary financial savings produce gradually when they could just get this mortgage and be in that house now - even if it expenditures them hundreds of 1000's of bucks.

I believe persistence is one of the best tools a youthful professional can have when it arrives to his/her cash. Just wait for a even though - you’ll be way a great deal much better off more than the lengthy run.

The Tax Deduction Myth
Possessing a mortgage just to get a tax deduction is some element of a fool’s activity, as outlined on page 187:

If you have a house with a payment of about $900, and the interest portion is $830 per month, you have compensated about $10,000 in interest that year, which creates a tax deduction. If, pretty, you have a monetary financial debt-totally free house, you would, in fact, lose the tax deduction, so they myth says to maintain your house mortgaged merely simply because of tax benefits. [[[[[...]]]]] If you do not have a $10,000 tax deduction and you are in a 30 % tax bracket, you will have to invest $three,000 in taxes [[[[[...]]]]] In accordance to the myth, we ought to deliver $10,000 in interest to the monetary institution so that we don’t have to deliver $three,000 in taxes to the IRS.

All the tax deduction does is lower the effective interest cost you’re getting to spend on your house mortgage a little bit.

In fact, Dave doesn’t even make the situation as properly as he could. If you’re using your mortgage interest on your tax return, that indicates you’re foregoing your regular deductions merely simply because you have other problems to deduct. So, get our situation - we have two adults in our house. Our regular deduction in 2009 is $eleven,400. If we choose to itemize our taxes (which we’d have to do to deduct our house interest), we have to have much more than $eleven,400 in interest on our house mortgage (or other deductible expenditures) to beat what we would currently ...