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7 ways to get more from your savings account

By Richard Barrington

Savings account interest rates have been low for so long that they have become a little like the old joke about the weather — everyone complains but no one does anything about it. Unlike the weather, though, you can do something to get a little more out of your savings account.

Stop waiting around

Savings account rates began to plummet when the Great Recession hit, and continued to sink until they hit bottom at 0.06 percent in May of 2013.

It is apparent by now that rates are not going to be revived back to their former levels all of a sudden, yet bank customers have been surprisingly passive about seeing their deposit income all but disappear. In part, this might be out of a sense of disbelief — interest rates essentially beat the odds by dropping so low in the first place, and they have continued to defy probability since. If you got sucked into believing that this can’t last, it is time to recognize that the trend shows no signs of turning around.

What this means is that the only way to get more money out of your bank deposits is to take action. Fortunately, there are a number of things you can do to get more from your savings.

7 ways to get more from your savings

Here are seven things you can do to get a little bit more out of your savings:

  1. Shop for rates. While 0.06 percent is the average interest rate on savings accounts, it is by no means a uniform standard. Rates vary greatly from one bank to another, with several offering rates that are 10 times or more than the national average. Shop around and — even once you have found a bank with competitive rates — make sure you check it against the marketplace occasionally to make sure it stays competitive. Also, don’t put too much stock in promotional teaser rates that expire after a couple months — they really won’t make much of a difference in such a short period of time.
  2. Bank online. has consistently found that online bank accounts tend to offer savings account rates that are significantly higher than traditional accounts. Banks are interested in promoting online accounts because they are much more cost effective for the bank, so they are willing to offer higher interest rates in order to attract customers to these accounts. You should take advantage of this opportunity to earn higher rates, and you might just find online banking is more convenient anyway once you get in the habit.
  3. Ask about a jumbo account. If you have a large amount of money to deposit, such as $100,000 or more, ask if your bank offers special rates for what are known as jumbo accounts. This might allow you to squeeze a couple extra basis points out of your bank.
  4. Step up into certificates of deposit (CDs). Unless there is an impending need for the money, your savings account should be kept at a level just sufficient to see you through an emergency. As savings in excess of that amount start to accumulate, periodically shift some of the money into longer-term CDs. This will earn you a higher interest rate and, if you create a CD ladder by putting money into multiple CDs with staggered maturity dates, you can set things up so your savings will still become available on a regular basis.
  5. Watch out for fees. Be aware that some savings accounts have started to charge regular monthly fees, while others charge for things like paper copies of statements. Watch your account statement and change banks if necessary to avoid these fees.
  6. Use direct deposit into savings. People generally have their pay deposited into a checking account and then transfer money into savings if there is anything left over. Instead though, if you have your pay go straight into savings and just transfer over to checking enough to meet your expenses, you will find it easier to stay on a budget and save more.
  7. Use tax-deferred vehicles. If you are planning to leave your savings untouched for the long haul, consider turning your savings account into a tax-deferred vehicle like a traditional or Roth IRA. After all, savings account rates are low enough without taxes taking a piece out of them.

You can’t do anything that will restore savings account rates to the level of a decade ago, but taking action might make the difference between beating inflation or having inflation beat you. Potentially, that could amount to the difference between having your savings move forward or slip backward over time.

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