Where To Save Your Money In Tough Times

Its been just over a year after the collapse of Lehman Bros. and now Americans are starting to spend less and save more. Of course this can be a good thing during a financial crisis that America is currently going through.

Piggy BankSaving your money might help lower your stress level and help you sleep at night, but it sure won’t make you rich or even close to wealthy. The interest rates of very low risk investments such as CD’s (certificates of deposit) and money market funds, are almost too low to make anything from. You should not expect to make a bundle from your emergency savings account and even now, interest on a $1,000 investment in a one year CD will hardly pay for a movie ticket, a coffee from Starbucks or a dinner at your local family restaurant.

Is there good news? Most definitely yes. The situation that Americans are in now cannot last forever as the economy recovers so will interest rates. Take a look at what you can do to get the most out of some popular low-risk investments while we all wait for the economy to recover:

  • Certificates of deposit. Right now the average rate for a one-year CD is 1.71%, according to bankrate.com. By investing in a five year CD, you will bump that rate up to 2.9%, but locking up your money for five years is a bad idea at such a low interest rate. As rates continue to rise you could be stuck at that rate and earn much less than if you had waited a year to invest. Greg McBride, senior financial analyst for bankrate.com says, Investing in CDs with shorter maturities, “will give you the flexibility to reinvest at regular intervals and catch the eventual uptick,” in interest rates.
  • There are many high yield bank accounts that are paying a little higher interest rates than CDs right now but income looking retirees are still better off with CDs because they offer predictability.
    “Even if you lock in a one-year CD at a rate slightly lower than that for a savings account, you know what you’re going to get for the term of the CD.” McBride says. With a high-yield savings account, he notes, “The yield can change at any time.”

  • High-Yield Savings Accounts. Some banks are paying 1.75% or more on their savings accounts, while if you searched you could find banks paying as high as 4.3% according to CheckingFinder. There are some banks and credit unions who offer rewards checking account with rates around 4% or more, but to earn these rates you usually have to set up direct deposit, receive your banking statements online (saves your bank money from mailing them to you) and use your debit card a certain number of times per month.
  • If you are in the search for bank and credit unions who offer rewards accounts take a look at Checkingfinder or Bankdeals.blogspot as they both offer a list of rewards accounts.

    The main reason why someone would opt-in for a high yield savings account is liquidity. You can withdraw your money without taking a penalty. If you are looking at setting up an emergency fund, this would be a great place to park those funds.

    As banks keep failing some people may feel uncomfortable with investing their money in an unfamiliar bank, even if they are offering a higher interest rate than a more familiar one down the street. As long as your bank is covered by the Federal Deposit Insurance Corp. (FDIC), your money will be insured for up to $250,000. Even married couples with joint accounts are safe for up to $500,000. If you use a credit union, make sure they are covered by the National Credit Union Administration and if they are, your money will be insured for up to $250,000.

  • Money Market Mutual Funds. A money market fund is a convenient place to temporarily park money you’re planning to invest in stocks or mutual funds, McBride says. A money market fund allows you to easily move your money quickly if a stock you have been watching hits your target price. To be safe, if you are still looking to stash away some money in your emergency fund, the high-yield bank or credit union accounts are still a better choice.
  • Even the bank that pays the lowest rate will still pay a higher rate than the average money fund. The current seven day average yield on money market mutual funds is 0.05%, according to the Money Fund Report, serviced by iMoneyNet.

Finding the best returns on your savings accounts, CD rates and mutual funds is a worthwhile endeavor, do not lose track of your main goal. The point of investing is to create a cushion against disaster like we are experiencing with the financial crisis of America. Michael Haubrich, a financial planner in Racine, Wis., says he encourages clients to shop around if it motivates them to save, but if they are more likely to save through a payroll deduction plan offered by their employer, that’s fine, too, he says, even if it’s not the best deal around.

The important part is to do something and start somewhere. Start with a certificate of deposit or find a high yield savings account to create an emergency fund.

When are CD Rates Coming Back Up? Part 1

CD Rates are Low

CD Rates are Low

Recently we’ve seen CD rates hit all time lows.  There are a few reasons for this, and understanding them is going to help you structure your CDs in a way that will maximize your interest earned.

Obviously, credit is tight right now.  The minimum FICO scores for lending have increased, banks have arbitrarily cut the limits on credit cards and lines of credit, and banks are still scared to lend in this economy.

These factors coupled with the influx of TARP funds, has created a situation where some banks have too much money.  For these banks, their deposits are beginning to exceed their demand (or desire) to lend.

In response, these banks will have some of the lowest rates in order to slow down the amount of new CDs coming in.  Why would a bank do this? Banks don’t make money on CDs unless they are lending that money out.

As the economy recovers and credit loosens up, we’ll see an increase in CD rates.  In the meantime, look for banks that are located in healthy local economies.  These banks are generally doing more lending, and as a result will generally have higher interest rates on their CDs.  Grab their 12, 18, and 24 month terms.  Don’t go any longer than two years.  If things continue the way they are, we’ll see short term CDs get back around 3% by then.

Read Part 2 of “When Are CD Rates Coming Back Up?

CD Rates Find a New Record Low

CD Rates Equal Good InvestmentThis week CD yield averages for 3 month, 6 month and 12 month CDs have hit yet another record low.  And it does not get much better for the longer term accounts.

Bankrate’s weekly survey of large banks and thrifts taken Oct. 7 found the average annual yield for a:

3-month CD fell to 0.41% from 0.43%. That’s the lowest average since the survey began tracking 3-month CD rates in March 1989.

6-month CD fell to 0.61% from 0.62% — the lowest average since the survey began tracking 6-month CD rates in January 1984.

1-year CD fell to 0.93% from 0.95% — the lowest average since the survey began tracking 12-month CD rates in October 1983.

2-year CD fell to 1.43% from 1.46% — the lowest average rate since August 2003.

5-year CD fell to 2.23% from 2.25%. That’s still slightly above the 2.15% reached in July, which was lowest average rate since the survey began tracking 60-month CDs in January 1984.

Do not let the doom and gloom of the averages stop you from checking out our Best CD Rates available nationwide.  There are still some excellent CD rates.

ING Climbs to the Top of Nationwide CD Rate Leaders

ING Direct Logo

The 12 Month Orange CD Option from ING Direct now sits at the top of the best “No Minimum Deposit” CD rates nation wide.

ING is paying a 2.10% APY on the 12 month CD term.  This offer is good for “New Money”, meaning the money cannot already be deposited with ING.

Deposits to ING are FDIC insured.  You can have the interested withdrawn into your checking or savings account monthly.

This new ING offer is much higher then the Nation 12 month average for CD rates, which is at 1.65%, and even beats out INGs long term 5 year CD which is currently at 1.75%

Compare all the Highest CD Rates Here.

Best CD Rates in Texas – October 2009

Below you will see the best CD rates for the state of Texas.

We have reviewed and sifted through many banks to find the best local rates Dallas Texas has to offer.

While with local CD rates you often get the personal touch of a friendly local banker, you may find the rates to be just under the national average.  You can check out our best cd rates to help you determine whether your local cd rates or national cd rates are better.

We determine the “highest” local rates by factoring in the CD rates with their respective term and comparing them to the national average.

Here are Dallas Texas’ best local CD rates.

6 Month

  • Texas Federal Credit Union – 1.92% APY – Minimum deposit = $1,000
  • SouthWest Airlines Federal Credit Union – 1.90% APY  – Minimum deposit = $1,000

12 Month

  • Baxter Credit Union – 2.50% APY – Minimum deposit = $50
  • SouthWest Airlines Federal Credit Union – 2.50% APY – Minimum deposit = $1,000
  • Branch Banking and Trust Company – 2.25% APY  – Minimum deposit = $2,500

24 Month

  • First National Bank – 2.68% APY – Minimum deposit = $1,000
  • SouthWest Airlines Federal Credit Union – 2.60% APY – Minimum deposit = $1,000
  • Washington Federal Savings and Loan Association – 2.50% APY – Minimum deposit = $1,000

All of the financial institutions mentioned above are insured by the FDIC or the NCUA.

Remember CD rates are time sensitive.  Please check with the financial institution for current rates and more details.  Refer to the date of this article for probable accuracy of cd rates.

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Special CD Rates for South Carolina- August 2009

As the nation average for 12 month and 24 month CD(certificate of deposit) Rates sit at 1.70% and 2.05% respectively, residents of South Carolina can take advantage of a much better special offer from Enterprise Bank of SC.

Right now, August 13th, Enterprise Bank is running a promotion on their 15 month and 27 month CD’s.

  • 15 Month CD: get a rate as high as 2.50% APY
  • 27 Month CD: Rates as high as 3.25% APY

If you are a resident of SC you can take advantage of these great deals.  Applications for these promotional CDs are only excepted in their branches.

Enterprise Bank Branches include:

Bamberg Office | Barnwell Office | Blackville Office | Cottageville Office
Edisto Office | Ehrhardt Office | Ridgeville Office | Springfield/Salley Office
Walterboro Bells Hwy Office | Walterboro Jefferies Office | Williston Office

(Please refer to Enterprise Bank web page for details on minimum deposits and other local CD information here.)

Best Local CD Rates for West Virginia – August 2009

We have compiled a list of the best CD (certificate of deposit) rates available in West Virginia.

Local and National CD rates often differ, and you may find CD rates that are better Nationally then Locally.  Be sure to check out our best cd rates, compare and contrast those with the local CD rates from West Virgina below.

It is hard to determine the “highest” cd rates because the term of the CD has a huge impact on the rate you receive.  So instead we have compared the CD rates to the national average and here are the best Local West Virgina Rates as compared to the national averages.

Best CD Rates for West Virginia

Mercer County Teachers Federal Credit Union
Term Rate Min. Deposit
6 month 2.17% $1,000

Mercer County Teachers Federal Credit Union is located in Bluefield, WV.

Alloy Federal Credit Union
Term Rate Min. Deposit
24 month 2.75% $1,000

Alloy Federal Credit Union is located in Fayetteville, WV.

Capon Valley Bank
Term Rate Min. Deposit
15 month 2.25% $5,000
28 month 2.75% $5,000

Capon Valley Bank is located in Wardensville, WV.

  • All of the financial institutions above are federally insured by either the FDIC or NCUA.

Remember all CD rates are time sensitive.  Please refer to the local bank or financial institution for exact quotes on current CD rates.  You can also refer to the date of this article to determine the potential accuracy.

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