Last week we talked about saving money or saving more money if we’ve already been saving. But we didn’t specify where to save our money. If I hurt your feeling with this next statement, well, then consider your feelings hurt. But you should know not to save your money in a shoebox or underneath your mattress, right? Good. No one was offended. Perfect. Some of you may argue – with a very good point – most of these commercial banks don’t even offer a decent percentage on our savings accountd so it’s almost like we’re saving it underneath the mattress anyways. Agreed. My bank, Chase and I think Bank of America and Wells Fargo, only offer 0.01% interest rate on all savings accounts under $25,000. Oh, but if you do have $25,000 or more, you’ll be able to earn 0.05% on your money. Wow.
Yeah, no. Do you know what 0.01% of a dollar is? Nothing! Do you know what 0.01% of $100? Still, nothing. 0.01% is basically one penny sliced into a hundred pieces. And then the bank telling you we’ll give you one slice of that penny.
If you’re outraged, you should be. That’s your hard earned money not even trying to work for you.
But if you have your savings in a online bank, like Aspiration or Ally, you can earn 1.7% interest rate on every dollar you have. Which is actually something versus nothing.
Which do I have? I have both. I have a traditional savings account with Chase… boo! And I have an online bank with Ally. Kinda yay. Let me explain. With Chase, even though I earned all of six cents this years, it’s liquid. I have access to my money 24 hours. With Ally, I earned over $26 this year, but if I need to pull out the money, it’ll take three business days to complete that transaction. I earn more money with Ally but don’t have immediate access. I earned way much less with Chase but can get my money whenever I need it.
Now, why did I say “kinda yay” for Ally? At one point I had a 2.2% interest rate with them. But with the federal rate being reduced repeatedly, it affected private institutions and their rates came down too. So this year, I lost 0.5% of my interest rate which makes me sad, but yet, my Ally savings account still out performs most brick and mortar banks.
Let’s talk about banks and saving. Email at: email@example.com