Archive for the 'Savings Account' Category

Leighton State Bank Offers 2.5% Interest On Savings Accounts!

Bank rates have been falling lower and lower, and nowadays it’s rare to find an annual rate that can climb to 1.5%. However, a special and limited time only rate from Leighton State Bank can cause investors eyes to sparkle as we see a savings account rate that is hardly available at these bleak times. Leighton State Bank is currently offering a mind blowing 2.5% APY on deposits between $5,000 – $24,999.99.

This rate is one of the highest rates available for savings accounts, and it is even higher than the rates of all 1 year certificates of deposit.
In Iowa City, the highest 1 year CD around is from Ally Bank at a mere 1.11%. Although this is already seen to be competitive as compared to the national average of 0.39%. Other institutions that can offer competitive rates are credit unions. One of the highest rates available is from Melrose Credit Union, and even their 1 year share certificate is only at 1.15%.

In order to open a Bonus Savings Account with Leighton State Bank, here’s what you need:

* $2,500 opening balance (account may already be opened with this amount, however the 2.5% rate will only apply to deposits of $5,000 – $24,999.99)
* A primary checking account

One of the things that need to be noticed with this account is that interest is compounded monthly unlike some other institutions that offer to compound daily. Also, balances above $24,999.99 will be subjected to a lower rate of 1.49%. Verifying with a bank official or customer representative may be done to verify this information.

This annual percentage yield has only been available since August 22 as Leighton State Bank celebrates its 100th year anniversary. And there is still no news as to when this promotional rate will be changed. Until that happens, there is still a lot of time left to make arrangements to transfer your cash from your current savings account.

Leighton State Bank is located in Iowa.

No Hope For Savers – Long Term Interest Rates Going Down

Earlier in the week the Fed announced a plan to move short-term securities into long-term holdings, such as 50-year bonds. This move would ultimately affect mortgage rates and other consumer and business loans. As investors buy up U.S. treasuries, yields will drop in response, forcing interest rates on mortgages to also drop. Over the past week the 30-year mortgage has dropped from 4.18% to 4.00%, pushing further into record-breaking ground. Just how far will mortgage rates drop? As long as the US economy stays weak and the Fed keeps short-term rates near 0%, mortgage rates could stay close to where they are right now.

How does this affect savers?

Anyone not buying a house, car or taking out long-term loans will be affected negatively by the current moves of the Fed. As long as banks and other financial institutions can get money at near 0% interest, they have no need to get it from investors. When the Fed increases rates, the cost to banks for borrowing money increases, this will in turn give the banks an incentive to pay its customers more to borrow their money.

Whenever you place your money into a bank account, savings account or certificate of deposit, the bank uses that money to lend to its customers of credit cards, mortgages, car loans and any other type of loans. In turn the bank charges an interest rate for these loans and pays its customers its borrowing money from a part of that percentage. This is how the banking system makes its money. When rates are down, the banks have no reason to pay a higher rate to investors. Therefore, as long as interest rates are at or near 0%, investors will lose, while those buying long-term loans will win by the decreased cost of borrowing money.

Will interest rates increase in 2011?

The U.S economy is projected to grow at an annual rate of 2%, not even keeping up with the rate of inflation. The current inflation rate for 2011 is 3.8% (US Inflation). When the Fed announced that it would keep interest rates near zero percent for ‘an extended period’, they said so because there was little prospect that the economy would recover within the next two years. This means that interest rates would stay low for this period of time, giving borrowers more time to make purchases or to borrow money at record low rates.

One of the dangerous causes of low interest rates is inflation. If inflation increases, interest rates would need to be increased to control the increase of inflation. The only hope for savers to see an increase on their savings accounts or CD rates in the near future would be to see an increase in inflation. Then it becomes a game of when, or if the Fed will renege on their original statement that interest rates would stay low until at least mid-2013. If the interest rate the Fed sets is not increased until 2013, then I do not see CD rates or Savings rates increasing until 2013 also.

Where are the best interest rates for savers?

If you are looking for the best interest rates on CDs or savings accounts, then stay away from major banks. Check your local credit union, as these financial institutions tend to have the best CD rates anyone can find. Melrose Credit Union is a great example of a Credit Union offering some of the highest rates on their certificate of deposits. Melrose is also a credit union open to anyone, while most credit unions are only open to specific groups of people.

A Different Kind of Savings Account: Peer to Peer Lending

Have you ever heard of the term peer to peer lending? Chances are you already have, but you’re just not sure what it is exactly. Basically, it’s a type of system where investors are able to directly lend their money to borrowers without the interference of a traditional financial institution such as banks. The lending is overseen by an online regulated platform which essentially have lower costs than traditional banking, giving off the savings back to the investors and borrowers.

The most popular peer to peer lending company is the Lending Club. This may sound new and questionable at first, but in fact, this idea has been branded by Harvard Business Review as “The Breakthrough Idea of 2009”. As of February 28, 2010, the Lending Club has funded over $89,000,000 in loans and given $6,200,000 in interest earnings to its individual investors.

To make the investment safe, the Lending Club has a strict policy on loan approval. So far they have a less than 10% approval rate for loans, reducing the risk for their investors. What’s good about the club is that savers who want to maximize the earnings of their money can expect a return of investment at around 6-18%. Back in 2010, their average return was at 9.65% APY. This surely beats regular savings accounts and even some certificates of deposit.

Also, the interest rate can vary depending on how adventurous and risk seeking the investor is. The Lending Club has established different grade scales that investors can fall under. There are currently 7 categories, from Grade A to Grade G. Grade A being the safest investment, and Grade G being the riskiest. Those who play it safe can earn an average of 6.62%, while those in Grade G can earn as high as 20.85%. The middle of the scale is Grade D with an average interest rate of 15.26%. As of July 20, 2011, Grade A investors gained an average annual return of 6.04%, and Grade D investors have 12.11%.

These numbers are certainly for real and investing is made easy. The best thing about it is that investors can get a monthly cash flow that may be reinvested or withdrawn. Peer to peer lending is a fairly new concept that can provide investors with an arena for higher returns but yet with relatively safer investments. For those who are looking to gain more in cash, this might be something worth looking into.

Should Retirement Savers Keep Their Money in Equity?

The market crash and economic crisis last 2008 was one of the most shocking things that could happen to retirement savers. It was when the value of their stocks dipped so low, many knees shook in fear. However, those who didn’t even bat an eyelash during the recession actually turned out to be winners, as statistics would show.

For the 401(k) investors who kept their equity and even continued to contribute despite the free fall last 2008, their average account balance grew by a staggering 64% from the period of October 2008 to June 2011. However, for those savers who decided to play it safe and withdraw their money between the periods of October 2008 and March 2009, and stayed out of equities through June 2011, grew their money only by a measly 2%.

For those who withdrew their money then jumped right back, experienced a growth of about 25%. All these values were taken from a study made by Fidelity Investments. They also concluded that people are in an all or nothing mindset when it comes to saving for their retirement. It’s either they join the ride for better or worse, or quit the game entirely.

So what do these statistics teach us? Well, we all know how the economy has been in a fluctuating stage lately and that stocks are going down again. The question is, should retirement savers let uncertainty grip them and push them to withdraw funds out of fear? Or should they hold on tight and wait for the waves to rise up again? As they always say, history repeats itself. This study should be enough of a guide for those looking for the right decision.

Top 10 Savings Accounts for 2011

Shopping for the best savings accounts? Well, finding the best savings account in the nation takes more than just looking at the yields. It takes particular research and scouting to weigh whether the interest rates will be enough to cover the potential fees most banks charge. Usually, online banks can give better rates with lower fees because they have little transaction costs as compared to brick and mortar banks.

Although savings rates have been at historic lows at the start of the year, things seem to be looking up with improved rates. Below is a list of the top 10 savings account for this year.

1. Ultima Bank – Rate of 2.00%, APY of 2.02%. Minimum deposit is at $0. Their SMART Savings account is good for young people aged 18 or younger. However, early withdrawals (before their 18th birthday) may lead to penalties.

2. Dollar Bank Federal Savings Bank – APY or 2.00%. Minimum deposit of $0. Rate apply for balances below $20,000. This account is called the FreeMONEY Savings. A FreeMONEY Checking account must be maintained to earn the rate. Available in Ohio and Pennsylvania areas.

3. Washington Savings Bank – 1.50% Rate, with 1.51% APY. Minimum deposit of $0. Account is called Saver Rewards where tiered rates apply. The APY is only valid for balances between $0-$15,000. This is only for online accounts and it requires a checing account with at least 5 direct deposits or 5 debit card transactions per month.

4. Palladian Private Savings Bank – 1.49% rate with 1.50% APY. Minimum deposit of $10,000. Rates are available only for current customers.

5. Gogebic Range Bank – 1.34% Rate with 1.35% APY. Minimum deposit of $100,000. Account must be opened in person. Available only in Michigan market area.

6. AMTrust Direct – 1.24% rate with 1.25% APY> Minimum deposit of $10,000. Rate applies for premium e-Money market account on earned balances of up to $24,999.99 new money only.

7. Mountain View Bank of Commerce – 1.21% rate with 1.22% APY. Minimum Deposit of $1,000. Savings account for minors available only in Colorado market area.

8. Discover Bank – 1.14% rate with 1.15% APY. Minimum deposit of $0. Account may be held in individual or joint ownership with up to 6 preauthorized transfers from the online savings account per statement cycle.

9. Capital One Bank – 1.09% rate with 1.10% APY. Minimum deposit is $1,000. Product is called InterestPlus Online Savings with a 10% bonus on interest earned with a $10,000 monthly balance. 10% interest may also be earned with the use of Capital One credit card at least once a month.

10. Colorado Federal Savings Bank – 1.09% rate with 1.10% APY. Minimum balance is $2,500. This is an online savings account with up to six withdrawal transactions per month without a service fee.

Win $10,000 By Saving With CitiBank

Want to win $10,000? All you have to do is save. Citibank offers an interesting deal of giving you a chance to either win $1,000 weekly, or the grand prize of $10,000.

First, you must have both a checking and a savings account or money market account with Citibank. Once you have both, you’re ready to proceed with the following steps:

1. Set up their AutoSave service. It’s a free service that helps you save even without thinking or doing anything. It sets up recurring transfers from your checking account to your savings or money market account.

2. In order to set up the AutoSave service, click on “Transfers”

3. Select “Set Up A Recurring Transfer”

4. Choose the accounts you want to transfer money to and from

5. Choose the duration and frequency of the transfers. At any time, you have the capacity to change the duration and how much you plan to save, including the frequency of transfers)

6. Now that you have your AutoSave feature turned on, transfer at least $25 to your savings account or money market account in order to be granted one raffle ticket.

It’s that simple! Not only can you automatically save up, but you can also get the chance to win $10,000 without doing much.

Now, if you’re not a CitiBank customer and you already have a savings and checking account in another bank, guess what, you’re still eligible to join. Apparently, CitiBank has included non Citibank customers in their fine print.

Eligible participants (18 years old and above, and a citizen of one of the 50 states), may enter without becoming a Citibank customer or using the Autosave feature by sending in their entries via mail. Hand print your complete full name, complete address, phone number, email address, and date of birth on a 3″ by 5″ envelope and mail it to Citibank. Be sure to include a postage stamp with that. One mail is one entry.

This promotion started last July 1, 2011 and will end on September 9, 2011. If this seems fairly easy to do, go right ahead and do it. Without even thinking about saving, you could already start planning what to do when your $10,000 arrives.

One of A Kind Savings Promotion from Bank of America

Bank of America offers a truly one of a kind savings, checking and debit card promotion. In order to avail of this, the depositor must have a savings account, checking account, and a check debit card. So here’s how it works, the program is called “Keep the Change”, and rightly so. Because for every purchase made with the debit card, Bank of America rounds the purchase off to the nearest dollar and transfers the rest automatically from your checking account to your savings account. In a way, it’s as if you’ve got automatic savings.

For example, let’s say you bough a pair of shoes at $25.01. The charge that goes to your debit card will automatically be $26, and the 99 cents that wasn’t part of the original price will be directed to your savings account. Another big plus aside from automatic savings is that during the first three months, Bank of America will match whatever amount you “saved”. So by the end of the year, Bank of America will give you another 99 cents, up to a maximum of $250.

Some people have found some creative ways to build up their “savings”, such as filling up their gas tanks to only $2.01 at a time, buying stamps at an automated machine, or buying small purchases in a grocery one at a time instead of by bulk. Whatever your strategy may be, it’s time to get creative just to get to that $250.

Some limitations are that ATM purchases are not considered to be a part of the promotion. Only five checking accounts per depositor is allowed, or five checking accounts per household, whichever is lower. Eligible savings account includes the Regular Savings Account with a minimum opening balance of $25. And also, the Keep the Change promotion may be modified or canceled at any time, without prior notice. Some fees may reduce earnings.

3 Sensible Ways To Convert a Traditional IRA to Roth

1997 was the year Senator William V. Roth, Jr. made the Roth IRA. With the Roth, contributions are made with after tax assets, making all your IRA transactions having no tax impact, with withdrawals completely tax free. This differs greatly to traditional IRA’s where contributions are often tax deductible. Meaning, before your contributions are made to your IRA, a tax deduction is made. Now, thanks to new rules, every American is free to convert their IRA’s to a Roth IRA.

The conversion however, will be taxed so the first thing you need to do is find a way to pay the associated taxes. Lucky for those who converted last 2010, because there was a provision where taxes could be payed in 2 gives. But now, this option is no longer available. Converting to Roth is the best thing for your IRA, so how can you pay the taxes? Here are some options:

1. Use IRA Assets

You can simply use the assets that you have within your IRA to pay for the conversion if you don’t have anything else you can use. However, there will be a 10 percent deduction of the IRA money you used because of an early withdrawal penalty. It will also be difficult to regain the money that you withdrew and this can severely cut the potential growth of your IRA. Use your own IRA assets only if there really are no other options for you.

2. Use other available assets

If you have moneys stowed away in a savings account or a CD, you can simply use these to pay for your conversion. This will keep your IRA account intact and with greater potential for growth. Be careful about what money you use though because you might have this saved up for other financial goals. When using an emergency fund, keep in mind that you will need to replenish this fund quickly just in case a real emergency comes up. Also you may choose to use half of your current assets, while also taking half from your IRA account.

3. Use life insurance

This strategy is only for those who plan to use their IRAs for their beneficiaries and not for their retirement. What you can do is purchase a life insurance plan, and upon death of the IRA owner, the beneficiary can then convert the IRA to a Roth while using the life insurance proceeds to fund the tax payment.

Converting to Roth can mean large savings on tax with every contribution. But this also means having to come up with ways to pay for the conversion itself. However you choose to do it, the conversion will be worthwhile because of the future tax savings.

Save Up For Your Child’s Future with an Education Savings Account

When a child is born, it’s only too common that parents will start thinking about the child’s future. This includes saving up for college and evading the need for student loans. Usually, parents start a college savings fund, but what about the high school and elementary years? Fortunately, there is a fund that covers both expenses called the Coverdell Education Savings Account or ESA.

What Is ESA and What Does it Have To Offer?

The ESA allows contributors to deposit up to $2,000 per year on the fund. The best thing about it is that depositors don’t get taxed on earnings from interest, appreciation and dividends. This allows more growth of the money that parents put in for their children. Regular savings account would normally charge taxes on the earnings of an account, but this levy does not apply for the ESA.

How to Qualify?

Your modified adjusted gross income or MAGI will be the basis for qualification. Aside from the parents, friends and relatives may also contribute to a child’s ESA as long as they meet the qualifications. Several factors will determine qualification of income, and a table for income ranges and contributions has already been set.

Basically, you can contribute $2,000 per child if your income is less than $95,000 for single individuals, and $190,000 for a married couple. Individuals with a MAGI between $95,000 and $110,00 can contribute a portion of the $2,000.

Avoiding Tax Deductions

Although the ESA is a tax advantaged investment, there are also instances when your child will pay tax on earnings. This would be because of violation of the fund’s rules. Some policies include choosing a school that allows federal financial aid, using the money for other expenses not included in the table of qualifying education expenses, and not using the money by the time the child turns 30. There are also regulations on putting in too much for a child.

The rules state that only $2,000 in deposit is allowable per year.
There are certainly some advantages with investing in an ESA for your child. Tax benefits are one of the strong reasons why an ESA would be a good replacement for that usual savings account or college fund. Also, if the funds are unused by the time the child turns 30, there is a provision that allows the rolling over of the money to another family member.

Sallie Mae Bank Tops The Best Savings Accounts

Sallie Mae Bank also the lender of student loans is at the top for the best savings account at 1.40% APY. This is the same return that was offered to savers since last spring.

All other major banks and institutions have been cutting their rates and offering less than Sallie’s 1.40%. paid a nice 2.00% APY in March, down now to 1.35% APY. Bank of America only offers up to 0.35% on some of their savings accounts, much less than Sallie’s 1.40%.

Even Ally who offers some of the better rates for their 12 month CD, currently paying 1.34%, offers a decent 1.24% savings account, much higher than big banks.

Here are some of the nation’s best available returns on Savings Accounts:

  • 1.30% APY from Capital One Direct Bank. Requires a minimum deposit of $1,000 and has an added bonus of their InterestPlus Online Savings account which pays a 10% bonus on the interest you earn.
  • 1.30% APY from American Express Bank. A stable bank owned by the major credit card company.
  • 1.25% APY from Discover Bank. Requires a minimum of $500 and is also owned by the major credit card company, Discover Card.
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