Today’s money challenge, should you choose to accept it: Check your interest rates to see if your current cash savings are competitive.
This is part of our series on occasional tasks you can do to improve your financial well-being. I’m not a personal finance expert — this is just stuff that I do myself from time to time. If you have any comments or different strategies, I’d love to hear them! See the entire Money Challenge series here.
(If you’re looking for more basic investing advice, I’d suggest taking a look at our Money Roadmap, which lays out what steps you should take and in what order, with links to posts with more information and discussion.)
You also may want to check out our personal money snapshots, where anonymous readers share their net worth, salary, and other thoughts on personal finance!
Like all of our challenges, this isn’t something I do often, but every few years I poke around and check if our cash savings are earning as much interest as they could be. (Note in fact that the NYT just published something about how savings rates aren’t likely to go higher any time soon because banks are flush with cash right now — so I wouldn’t expect to see anything super high when you check today.)
Where to check:
- Banks (especially online banks, but local banks may also have good rates): Mint actually has a little look-up feature to check the major banks; it’s not hard to find their interest rates.
- Credit unions: This is more personal for you! I tend to check my husband’s and my four universities, but you may find your profession or another connection makes you eligible for a savings union that offers a better rate. Your employer, church, professional association, or union may also have one; if you’re a veteran there are options there, too. Here’s a roundup from NerdWallet for 2022.
- Money market funds: If you’re already investing with something like Vanguard or Schwab, there have been times in the past when the money market funds actually had good rates of return. If you’re not familiar with the terminology here, this is the money that is in your account but is not yet invested. These rates haven’t been good in recent years, but about 20 years ago they were providing 7% interest, so I still check them every so often. It’s important to note that these funds are not FDIC insured!
- CDs: You may not be inclined to think of CDs for savings, but sometimes Ally or other banks have a “no-penalty CD,” which lets you take your money out at any point. These can sometimes have good interest rates — I’ve seen 2.5% in recent years. (If you do find good interest rates but they’re a few years out, consider building a CD ladder — I’d love to hear from any readers who have built a CD ladder in recent years, though, because I have yet to see savings rates / time frames that make sense for a ladder.)
Readers, what interest rates are you seeing these days? How often do you check your interest rates, and where do you end up keeping your money as a result? (How much of a difference in an interest rate are you tempted by?)
Psst: In honor of this series’ original title, Tales from the Wallet — here’s a mini hunt with wallets we love!
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Stock photo via Deposit Photos / timbrk.