January 27, 2015
I would venture to guess that everyone has a bank account. Nowadays, people can’t live without their checking accounts and debit cards. I would also venture to guess that most people have a savings account (because that’s the usual setup at a financial institution). But do people really maximize their savings account, and therefore, their money? There are a multitude of products and services out there, offered by your financial institution, that will put your money to work for you and grow your savings…without even putting in extra hours at work!
Savings accounts typically have higher interest rates than checking accounts so it’s recommended to keep most of your dollars in savings so it can earn interest (aka free money!).
In other words, don’t stockpile too much money in checking or you’ll miss out on earning more interest (again, free money!)—only keep what you need in checking and transfer over from savings, when necessary.
Certificate of Deposits
A Certificate of Deposit (CD) is an investment that earns a premium interest rate and is used on money that you don’t anticipate needing in the near future. CD’s can generally be for any dollar amount and the length of time, or term, can be from 6 months to 10 years, with the interest rate being higher as the term lengthens. The interest rate is determined at the time of the investment and is locked at that rate for the life of the CD, which makes this a very safe investment because you can easily determine return.
Individual Retirement Accounts
Though your retirement may (or may not) be a long ways off, it’s inevitable and therefore, should be prepared for ahead of time—an Individual Retirement Account, or IRA, is a savings account designed to do just that! The key feature of an IRA is the ability to make contributions on a tax-free or tax-deferred basis, which can make you a lot more money because they typically hold higher interest rates as well. The beauty is anyone can start an IRA, regardless of your age or salary. Talk to your local financial institution to find out what’s right for you.
By: Jennifer Guderjahn, Personal Banker