Saving

Make your money work for you instead of sitting around not earning interest and losing value because of inflation...

As some of my young professional friends experience success in their careers and begin to earn more money one of the topics that comes up is what to do with money they don't want to put away for retirement or long term savings. They realize money loses value over time and don't want to miss-out on making interest with the money they are saving, but also want to have access to it when they need access. A high interest savings account is a great place to put your money so it earns some interest (keeping up with inflation, at least, but hopefully more) and still remain fairly liquid and have quick access to it if you need it.

What is a High Interest Savings Account?
It is simply a savings account that earns higher than normal interest. Typically, these accounts are through a bank that is accessible primarily online and links to your existing checking account. It is through this linked account that you can deposit and withdraw money to/from your high interest savings account. Although, some of these banks are also providing checking accounts as well these days and allow you access to your money through ATMs.

Reasons for Having a High Interest Savings Account

• Interest - Earn more money, of course! Some accounts earned in the range of 3.5-5.5% APY (definition) last year.


• Inflation - Money loses value over time because of inflation. Last year, U.S. inflation was 3.24% (inflationdata.com) which means you needed to earn that much interest just to keep your savings worth the same this year.


• Liquidity - It only takes a few days for an electronic transfer to occur to your linked checking account, sometimes even less if the bank offers ATM access.


• Emergency fund - Provides a great way to save money in case of an emergency or if you come up short on your bills one month.

What banks offer these accounts?
While I can't speak from personal experience about most banks, some of the popular ones I've seen are:

• ING Direct - 4.50% APY, no fees, no minimums


• Emigrant Direct - 5.05% APY, no fees, no minimums


• HSBC Direct - 6.00% (PROMOTIONAL, only through April 30, then lower), $1 minimum


• WaMu - 5.00% APY, $1 minimum

ING Direct
I cannot say which bank is the best for you, but I can personally recommend ING Direct. I have had an account with ING since a little over 2 years ago (when their APY was somewhere around a competitive 3.0%) and have been very satisfied. While they typically don't have the highest interest rate (usually beat by Emigrant Direct, at least), their plain language terms and conditions, no minimums, no fees, simplistic philosophy, and consistently rising APY appealed to me. Also, they offer a free $25 to you and $10 to the person you signed-up through with a minimum initial deposit of $250 (email me for a recommendation link!). This minimum is not required unless you want some free money!

Do it TODAY!
A high interest savings account is a great way to save money so it grows, but is also very liquid, letting you withdrawal it in a time of need. Banks such as ING, Emigrant, and others make sign-up quick and simple and link to your existing checking account at any bank. Start saving today for your down payment on a house, vacation to South America, or to just improve your personal net worth!