What Products To Invest in, During Such Rocky Economy?

Investing money in fluctuating products like stocks and currency today is quite risky. Hence, most investors have switched to high-interest savings accounts, checking accounts, and Certificate of Deposits, which are comparatively safer. The returns, however, are not so high. They are low, in fact (below 2%).

Interest rates are low, and they aren’t expected to rise until the economy improves. And the banks are not at fault. ING is not trying to rip you off. Ally Bank doesn’t detest you.

So, Why Are The Rates Low?

The rates are low because the government doesn’t want you to save money into the bank. They want you to put money into the stock market, and boost it a bit, which will eventually help the economy.

Where Do I Put My Money? Where Can I Get High-Interest Rates?

That’s a good question. Let’s have a look at some of the options we have.

High Interest Checking Accounts

Although big banks aren’t offering a good rate of interest on checking account, there are many credit unions and small community banks that offer a higher rate of interest. There are several checking accounts, all with different names, but not much dissimilar features. There is an account known as Rewards Savings Account, which offers high rate of interest, but only if you meet certain criteria.

You have to:

• Get you statement through internet every month, you wouldn’t get it through mail.
• Log in into your online banking account once a month, at least.
• Make purchases on your debit card (number of times differs for each bank), and ATM withdrawals are not counted.
• Make one or more electronic payment each month, like payment for phone bills.

If you are able to meet these criteria, you can earn an interest rate of upto 5% on a part of your balance, if not the whole balance. Some banks ask for minimum balance of $10,000, and some for $100,000 in order to offer high rate of interest.

High Interest Savings Account

If you want a higher rate of option, checking account is not you must look for. You must deposit your money in a high interest savings account in an online bank or a traditional bank.

When you are looking for a high interest savings account, do not forget to check rates offered by online banks.

Why?

• Although banks like Wells Fargo and Bank of America have a strong online presence, the rates offered by them are usually lower than online-only banks, similar to ING Direct.
• Many people are afraid to deposit money into an online simply because of security issues. Hence, in order to attract more users, they offer comparatively high rate of interest. Experts, however, believe online banking is comparatively safer than traditional banks, as there aren’t any paper trails.

Which Online Banks Do I Consider?

Here are few of them. Do not forget to check the interest rates if you plan to deposit money into an online bank savings account.

EverBank
This online-only bank has been named as ‘Best of the Web’ bank by Forbes Magazine for five consecutive years. It offers APY of 2.25% 3 months bonus rate, and around 1.51% APY on it’s money market account on the first year, up to $50. It was also named as ‘Best of the Breed’ by Money Magazine. Initial deposit is $1,500, and minimum balance is $5,000.

Sallie Mae
It offers an APY of 1.40%. It doesn’t charge any monthly fee nor does it ask for minimum balance. Also, it provides compound interest on daily basis.

Capital One
This bank has come up with an InterestPlus Savings Account, which offers an interest rate of 1.35%, and it can increase up to 1.49% if you maintain a balance of minimum $15,000, or if you get a Capital One Credit Card.

Ally Bank
With no monthly fee and no minimum balance, it offers 1.29% APY. It was named as ‘Best High-yield Savings Account’ by Kiplinger’s Personal Finance last year.

FNBO Direct
This too is a great choice as it offers around 1.10% APY without charging any monthly fee or minimum balance. According to research conducted by BankRate, FNBO is one of the safest online banks available today.

Certificate of Deposit

You can earn a high rate of interest by investing in a Certificate of Deposit, also known as CD. For people who are not aware about what they are, this is a type of investment (or loan) you give to a bank, and don’t touch it for certain period. Usually, the period of investment is directly proportional to the rate of interest. The longer you invest for, the higher would be the interest rate.

However, this is quite different from a savings account. Once you put your money in a CD, the rates don’t change. For instance, if you put your money in a CD at 4.00% for a period of 2 years, you would receive 4.00% even if the rate drops by 1% during the tenure.

There is, however, a disadvantage of not investing money in CDs. Your money is not liquid. You can withdraw money from your savings or checking account, but you cannot pull it out from a CD befere the maturity date.