The term high interest savings account – at least the name – is nothing but a ploy. It would be like me saying “Super Fast Running Shoes” or “Lightning Quick Internet.” Yes the shoes might be fast, but it’s the person using them that determines their speed (and if anyone finds an internet speed as fast as lightning, please let us know).
Similarily, the term High Interest and Savings Account are typically put together to evoke a sense of, “Yes, I would rather have more interest for my savings account then less.” Who wouldn’t?
The trick with these types of savings accounts is to know what to look for — and what to look out for — when making this important financial decision.
When choosing a high interest savings account, here are the most important points you should consider:
- Minimum Deposit – If you have $100 bucks to your name, most “high interest” savings accounts will be out of the question for you. Typically, the minimum deposit is around $1500. Some even require $10,000 or $25,000+ to start. We did find a two reputable companies that have no minimum balance.
- The REAL Interest Rate – To entice you, many companies will offer a short term interest rate that is considerably higher than the actual interest rate you will receive in the long run for your savings account. This is all well and good, just make sure you take the correct weighted average of what your true rate will be since a 2.1% rate sounds good until you realize that it’s only good for 60 days at which time your rate drops down to 1.1% (you’d be better off in the long run with a fixed rate at around 1.3% or higher).
- The Hidden Terms – Like any financial product, make sure you read the fine print once, twice, and then twice more. The reason most people setup a online savings account is because they want the convenience of online with the best rates to boot. Companies that JUST tout a high rate and low minimum requirements can often have some of the strictest limitations on withdrawals, transferring money out, etc.
If you are interested in finding the best high interest savings accounts in 2011, be sure to check out our pre-screened, recommended companies. It’s updated daily allowing you to find the top deals for your own high interest savings account.