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How to Automate Your Savings

This article was written by in Saving. 8 comments.

A simply way to save more is to automate your savings. In this step-by-step guide, we show you how to put saving money on auto-pilot.

automate your savings

Recently, I’ve been doing a lot of reading about the power of habits. Books like The Power of Habit and Making Habits, Breaking Habits have given me insight into how habits work. They’ve pointed out that the vast majority of actions we take on a daily basis are habitual.

When was the last time you consciously thought about driving to work? Brushing your teeth? Eating lunch? Walking up or down stairs? Kissing your kids goodbye before school?

These actions are all habits. And that’s a good thing. Without habits, we’d have to expend way too much mental energy thinking about the things we have to do every day. Habits free us up to put our time and energy into more important pursuits, like succeeding at work or finding new solutions to old problems.

All this talk about habits has made me realize the importance of habit in finances, as well. You probably already have lots of good, and probably some bad, financial habits. You may follow a particular routine for paying your bills and tracking your budget. Or maybe you have a habit of clipping coupons before you grocery shop, or shopping around for the cheapest airfare before you travel.

But one of the most important financial habits is that of saving. Without saving money, you simply can’t get ahead financially. Luckily, creating new savings habits is actually much easier than creating new diet or exercise habits. That’s because it’s really simple to automate your savings. Automating your savings becomes a habit as soon as you set up the automation and leave it alone. And you’ll reap the benefits for as long as you leave the automation in place.

So how can you automate your savings? Here are five ways to build this financial habit.

1. Use separate accounts

If you don’t already have at least one separate savings account from your checking account, what are you waiting for? There are too many low-fee and no-fee options available today to keep all of your money in one place. And, in fact, I’d recommend setting up at least four separate savings accounts. Here’s what you should have:

  1. A retirement account. Of course, you should be saving for retirement. This is best done through a 401(k) if your employer offers one. If they don’t, or if you’re self-employed, set up an IRA without delay. Then, start saving for retirement in this tax-advantaged account.
  2. A short-term savings account. This account should be for expenses that you know are coming within the next year or possibly two years. It depends on your definition of short term, really. That’s a personal preference. But either way, you should have an account like this to save for specific upcoming expenses. This account can be attached to your checking account, and you may find that it’s fairly fluid.
  3. A long-term savings account. You’ll also likely have longer-term savings goals you want to meet. There might include taking a fabulous vacation to Europe, paying cash for a new car, or putting a down payment on a home. This account should be separated from your checking account, and you should look to get a better yield on this type of savings.
  4. Emergency savings. We’ve talked elsewhere about having a comprehensive emergency plan, rather than just an emergency fund. But an emergency fund is part of that plan. This should definitely be separated from your checking account. You might even consider a CD ladder strategy for this type of savings.

Separating out your finances to this degree might seem ridiculous. But it will help you keep track of how well you’re saving. And it’s essential to automating different types of saving.

2. Set up your direct deposit

The first thing you should do is follow the old adage to pay yourself first. Luckily, this is easy for most people who have direct deposit through their workplaces. Most employers will split your paycheck at least two ways, if not more, on payday. You’re not at a high risk of spending money that never sees the inside of your checking account. So if you can take this option, do.

Just be sure that you carefully calculate your savings with this option. Look at your retirement funding first, and put at least enough into your retirement account to get any matching funds that are available from your employer. Typically, retirement funds won’t count towards your employer’s limits on the number of accounts you can use for direct deposit.

Next, if your emergency fund isn’t up to snuff, send part of your paycheck there. Once that’s funded, you can redirect your emergency savings to your long-term savings. Speaking of which, make long-term savings your next direct deposit goal. If you can, add short-term savings, as well. But if this is too many accounts, just split your paycheck three ways.

Typically, you can set up these direct deposits based on the percentage of your paycheck or a set dollar amount. A percentage-based amount can be a bit safer if your paycheck is at all variable. But if you’re a salaried employee, directing a set amount of cash to each account can make sense.

3. Set up automatic transfers

What if you can’t split up your paycheck in as many sections as you’d like? In this case, you can set up automatic transfers. Your bank will automatically route money from checking to savings on a particular day of the month, if you choose. This is a good way to continue paying yourself first, even if you run out of paycheck-splitting options through your workplace.

4. Set up other savings rules

You can set up other savings rules to help you continue to automate your savings, as well. For instance, you might transfer $10 into your savings account every time you go grocery shopping. Or you could make it a habit to transfer money to savings each time you go out to eat, buy your favorite expensive coffee drink, or spend money on new clothes. With these types of habits, you’re basically “taxing” your own behavior so that you save automatically based on things you do every day anyway.

You can also use an app to further automate your savings based on rules like these. For instance, the app/banking solution Qapital lets you set up specific savings rules. then it transfers money according to these rules. Or you could use Digit, an app that analyzes your cash flow and saves money for you automatically.

5. Keep track of your progress

Finally, it’s essential that you keep track of your progress and constantly re-evaluate why you’re saving and how you’re working towards your rules. Keep tabs on your savings account balances, and keep thinking about how those play into your goals. Then, change your automated savings as you need to. This might mean changing your direct deposit amounts, boosting your automatic bank transfers, or changing your behavior-based savings rules.

You’ll be surprised at how quickly you’ll make progress with your savings goals once you start automating your savings.

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The New Emergency Fund: Seven Components of an Emergency Plan

This article was written by in Best Of, Saving. 13 comments.

It’s important to save for a rainy day. In this guide, we give you ideas on where to put an emergency fund and how much you should save.

where to put an emergency fund

The world of personal finance is rife with oversimplified platitudes and one-size-fits-all advice. No where is this more evidenced than in the often-repeated advice about emergency funds.

Typical advice says that you should save three to six months’ worth of expenses in a high-yield savings account. Some financial gurus opt for eight months’ worth of expenses saved up, while others say four is enough.

Still others advocate for starting with a couple thousand dollars and beefing up the fund after you’ve paid off all debts.

How much you should have in an emergency fund and where you should keep it is more personal than this. In some situations, a smaller emergency fund may work just fine. And for some people, a low-interest home equity line of credit can be a reasonable emergency fund. In other situations, having this much cash on hand is a good plan.

But high-yield savings accounts are really providing barely enough to keep up with inflation. Stashing a ton of cash in a savings account may not be the best option. In this case, you might consider having a broader, more diverse emergency plan. This can help you make it through true emergencies without losing out on the interest your money could be earning.

If you’ve never thought through what you’d do in a financial emergency, consider creating an emergency plan that includes the following components:

1. “Mattress cash” stash

Clearly, I don’t actually mean hiding cash in your mattress, necessarily. But it’s not a bad idea to stash a small amount of cash around your home. If your ATM network is down for some reason and you need cash, you can get what’s in your home. I’m not talking about keeping a ton of cash in your home. This should be maybe two or three hundred dollars.

After all, in the case of a truly catastrophic world event, that cash won’t have much value, anyway. So we’re not really planning for that type of situation. This is more the type of situation where you’ve lost your wallet and had to cancel your debit and credit cards. You’re waiting on replacements, but you need to put gas in the car and groceries in the pantry right now. In this situation, you could make a couple hundred dollars work for a week or two.

2. Liquid account

Unless there’s a worldwide banking catastrophe, you should be able to access the next portion of your emergency fund within one day. You might consider putting this portion of your emergency fund into a money market or high-yield savings account. The idea is to earn as much interest as possible without losing FDIC insurance and easy access to your cash.

How much should you put into this fund? It really depends. The idea is that this should be enough to get you through from a job loss to the first paycheck at a new job. Many experts recommend having one to three months’ worth of expenses in this type of account, if not more.

The key here, of  course, is that you’re saving expenses, not your actual income. If you make $4,000 per month but only have to spend $2,000 per month to meet your basic needs, you should use $2,000 as your monthly goal. So for three months’ worth of expenses, you’d only need $6,000 in savings.

Your thoughts for this portion of your emergency plan may differ, depending on your current situation. In a two-income family, for instance, you may not need as many months’ worth of savings. After all, the chances of both working adults losing their jobs at the same time are probably fairly slim. On the other hand, if your particular career suffers from an unstable job market, consider saving even more in this part of your plan.

3. Certificate of Deposit ladder

You can earn a bit more interest on your emergency savings if you use a short-term Certificate of Deposit ladder. With a CD ladder, you progressively invest in more certificates of deposit, which each have their own maturity date. As each CD matures, you can either pull out the money, penalty-free, to cover your expenses. Or you can reinvest it if you’re not in the middle of an emergency.

Combined with liquid savings, a CD ladder can be a good way to get through an emergency without losing out on slightly higher APRs. For instance, say you save three months’ worth of expenses in your liquid account. Then you create a CD ladder of three-month CDs. You’re then guaranteed to be able to tap at least one CD by the time you run out of liquid emergency fund savings. And if you need to keep pulling from the CD ladder, you can.

This way, you can take advantage of potentially higher CD rates, while avoiding penalties for withdrawing from your CDs early.

4. Investments

As you’re planning how to save for retirement, consider potential emergencies, too. In an emergency, you can withdraw your contributions (not your earnings) from a Roth IRA. Depending on your broker, these withdrawals could be free from penalties, taxes, and fees. Once the emergency has calmed down, you can contribute the withdrawals back into your Roth IRA.

You can also consider tapping into your taxable investments, if need be. This isn’t always the best option, especially if your investments are down. But if a true emergency, it can be a way to cover your expenses and potentially get some tax benefits while doing it. Remember, too, that if you sell when your investments are worth more than when they were purchases, you’ll face some tax implications. Just account for that when determining whether and how much to withdraw from your investments.

The best-case scenario is, of course, to have enough in liquid and intermediate savings not to have to tap your investments in an emergency. But understanding how this could potentially work is a good idea when you’re planning how and how much to invest.

One more item of note along these lines: do not rely on a 401(k) loan during an emergency. If you should lose your job, the loan would come due immediately. That just makes an already tenuous situation even more risky.

5. Credit

Using credit in an emergency can be a slippery slope. But it can be used wisely as part of a broader emergency plan.

For instance, if you’re currently paying hefty interest on credit cards, you should put your extra cash into paying them down rather than saving for an emergency. But you’ll want to be sure you don’t go back into high-interest debt if an emergency does arise. In this case, saving a couple thousand dollars to start can be helpful. This can help you get through unexpected car repairs or other smaller emergencies.

Then consider keeping open a home equity line of credit to use for larger emergencies. With today’s lower interest rates, you could finance a longer-term emergency without paying interest through the nose.

Another option is to keep your eyes open for credit cards with an introductory 0% APR on purchases. These cards are widely available to those with good credit. And you can often get one at the drop of a hat. This could get you access to a line of credit in an emergency. Hopefully the introductory offer would give you enough time to get through the emergency and then repay the balance before the introductory period ended. Luckily, credit card issuers are now offering these introductory periods for anywhere from 12 to 18 months, and sometimes more.

6. A bare bones budget

On an everyday, non-emergency basis, you probably have lots of little–or even large–expenses that you could cut out in a true emergency. It’s a good idea to know ahead of time what this would look like. Take a look at your spending for the past three months, and determine which expenses you could have cut with ease and which you could have cut with a bit of work or sacrifice.

This might include things like your cable subscription, other entertainment-related expenses, any dining out expenses, extravagant grocery-related expenses, and more. See just how much you could have cut out of your budget, and put that on paper. That’s your bare bones budget. If you had absolutely no money coming in, that’s how much you’d need to survive.

The exercise of writing down your bare bones budget is helpful for a couple of reasons:

  1. It helps you determine your emergency savings goals. Remember, saving for an emergency is about saving for essential expenses, not your normal, I-have-a-good-income spending. Writing down your bare minimum budget lets you see what you actually need to save for emergencies.
  2. It’ll give you a reference point in an emergency. When an emergency hits, you’ll be too busy looking for your next job or putting out the proverbial financial fires to think too much about basics like budgeting. So having this bare bones budget written down ahead of time can be helpful. You can use this document to know which services to cancel right away and how to budget until the emergency is over.
  3. You’ll see how much extra you’re really spending. Finally, writing down your bare bones budget is great even if you aren’t in the middle of an emergency. It’ll help you see just how much of your daily spending is truly necessary versus extra. While you don’t need to live on this strict budget all the time, it’s a good way to gauge if your spending is reasonable or getting out of control.

7. Stock up on essentials

I’m not advocating becoming a doomsday prepper, but having a stocked pantry and medicine cabinet can make emergencies easier to get through. And it’s not that hard to plan ahead. Just add a few extra cans of beans or other non-perishables to your cart each time you go to the grocery store. Shop in bulk for paper goods like toilet paper and paper towel. And keep your medicine cabinet well-stocked with first aid supplies, over-the-counter medicines, and such. And if you’re on any prescriptions, be sure to keep them up-to-date and refilled as often as possible.

These essentials may not get you through a several month long period of unemployment. But if you can get through the first month or two without having to buy more than milk and eggs from the grocery store, your emergency savings will go a long way. This is just a simple step to take over time so that you can cut expenses at the drop of a hat.

When you think about your emergency plan as more of a comprehensive plan, you’ll feel more prepared for potential emergencies. You’ll also know how to save for emergencies without your savings being eaten away by today’s still-low interest rates. Do you have a broader emergency plan? What does it look like?

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50 Tips to Help Establish Your Emergency Fund

This article was written by in Saving. 14 comments.

50 Ways to build an emergency fund. Tips, tricks and strategies on saving more for emergencies and where to keep your rainy day money.

emergency fund

There’s a reason Dave Ramsey’s famous Baby Step #1 is to build an emergency fund. It helps people get on track for becoming financially independent.

I don’t agree with everything Ramsey says. But having at least a small emergency fund to begin with can be helpful. A basic emergency fund is a place where you keep cash for true emergencies, such as job loss or a broken-down car that would prevent you from going to work.

Ultimately, you’ll want enough cash in your emergency fund to cover all of your necessary expenses for a 3 to 6 month period. But any amount of money saved is a start.

Beyond the basics, I suggest at least five separate components to a complete emergency plan. Getting to that point presents challenges for many people. When you’re starting out, it can be difficult to assemble even the basics for eventual financial freedom.

Banking Deal: Earn 1.75% APY on an FDIC-insured money market account at CIT Bank.

But even if you’re hard-pressed for cash, you can still start an emergency fund. Here are fifty different ways to start saving today:

  1. Open a high-yield online savings account with as little as one dollar. This gives you somewhere to put your emergency funds, which is essential. And you might as well protect against inflation while you’re at it.
  2. Sign up for direct deposit. When you do, have part of your paycheck–as little as a few bucks–deposited right into your new online savings account. You won’t spend it if it doesn’t hit your checking account in the first place!
  3. Empty your pocket change into a jar every night. Then, put the change into your savings account every couple of months. Don’t spend much in cash? Try an app like Acorns that automatically rounds up your transactions to save your virtual change for you.
  4. Add to your jar every time you swear. Trying to break a bad habit? Tax yourself every time you do it. You’ll break your habit more quickly and save money while you’re at it.
  5. Have a garage sale. Selling off things you no longer want or need can get you started on the road to saving. Plus, it’s nice to de-clutter the house once in a while!
  6. Sell on Craigslist or Facebook groups. Bigger-ticket items may net a better price sold individually on Craigslist or your local Facebook garage sale group.
  7. Whenever you purchase groceries with a coupon, deposit your savings into the bank. This works especially well if you aren’t already in the habit of using coupons. Whenever you cut a few bucks off of your typical grocery bill, save the extra. You’ll never even miss it.
  8. Downgrade your cell phone or cable service. The best ways to save are options that let you keep saving money, month after month. Just be sure you put the money saved into your emergency fund every month!
  9. Bring your own lunch to the office. Say you typically spend $10 for lunch at work, but you can make a salad at home for $2.50. Every day you bring your lunch to work, put $7.50 into your emergency fund.
  10. Ask for a raise. Pull together your work performance stats for the past year or two. Then, get together with your supervisor, and lobby for a raise.
  11. Save your raise. If you do get a raise, don’t let lifestyle inflation eat it all up. Instead, have it automatically deposited to your savings account rather than your checking account.
  12. Drink soda rather than alcohol when you’re dining out. Buying even one drink at dinner can set you back $5 or more. Every time you downgrade your drink, throw the money you’ve saved into your emergency fund.
  13. Switch to store-brand food items. Get a feel for how much this cuts from your weekly grocery budget. Then save the extra cash.
  14. Switch to generic medication. Many times, doctors don’t mention generics, but you can switch to them if you ask. Again, keep track of how much you’ve saved, and add it to your bank account.
  15. Cut back or eliminate your addiction to smoking. Smoking has up-front costs, of course. But you’ll also save money on healthcare over time if you quit.
  16. Be aware of your ECRD Factor. What are you spending money on that you could eliminate or cut back on? Find those areas, and then leverage them to save more money.
  17. Start a side gig. Whatever your side gig, put any profit from it directly into your savings account.
  18. Use a cash back rewards credit card. Instead of putting the rewards towards extra spending, put them into your savings account.
  19. Save gas by not driving faster than 65 miles per hour. You can also save gas and be easier on your car by not braking too hard and by following other safe driving practices.
  20. Stop using credit cards if you pay interest. If you have trouble not carrying a balance, just stop using your credit cards.
  21. Cancel your Netflix subscription. Actually, look at all of the subscriptions you’re charged for monthly or annually–Netflix, Hulu, Amazon Prime, Spotify, etc. If you don’t use them enough to justify the costs, just cancel them.
  22. Do your own yard work. If you’re currently paying someone to do your yard work, start doing it yourself. You’ll get a workout and save some money.
  23. Visit the library rather than your local bookstore. Bookstores are great. But you can save so much money on reading material by renting it from the local library!
  24. Stock up on non-perishable groceries when they are on sale. Having a well-stocked pantry is essential to keeping your grocery spending lean. Get familiar with your local stores’ sales cycles, and stock up when you can.
  25. Cancel magazine subscriptions. If you have some must-read magazines, subscribing is better than paying more at the newsstand. But if you’re not reading those magazines cover to cover every month, cancel them.
  26. Reuse or repair things instead of replacing them. Then, take the money that you saved by not purchasing new, and put it into your savings account.
  27. Delay vacations until your emergency fund is complete. This is a tough one. But you should have at least some part of your emergency fund saved before leaving on vacation.
  28. Sign up for online bill payment if your bank offers the service for free. This will keep you from missing bills and paying late fees.
  29. Shop around to ensure all your your financial accounts do not charge you extraneous fees. In this day and age, you shouldn’t pay for the privilege of using a checking or savings account!
  30. Always know how much you have in the bank so your accounts will never be overdrawn. Money management and budgeting apps are a great option for helping your manage this.
  31. Use public transportation rather than driving when possible. Alternatively, consider biking to work.
  32. Work a few extra hours at your day job. If you’re paid hourly, you can earn extra to put into savings. If you’re salaried, impressing the bosses could net you a raise sooner rather than later.
  33. Call your insurance provider and ask for an updated quote. In face, you should shop around for insurance once a year. You never know when you’ll get a better offer!
  34. Crawl the web for abandoned and unclaimed property owed to you. You never know what you’ll find. Put any unclaimed cash straight into savings.
  35. If you travel, join AAA; the discounts will often pay for the membership fee.
  36. Cancel your gym membership. You can get a great workout at home with some free weights. And you can always get your cardio in by walking or running outdoors.
  37. Consider refinancing your mortgage. If you haven’t taken advantage of low interest rates, now is the time. You could save hundreds per month, depending on your circumstances.
  38. Cook and brew coffee at home. Cutting out a latte a day may not make you a millionaire. But cooking and brewing your coffee at home can save you a few bucks a day.
  39. Find opportunities for one-time income. Don’t have time for an ongoing side gig? Consider doing one-time income-earning opportunities like babysitting or house sitting.
  40. Check out your memberships. Are you a member of a professional club you don’t get much use out of? A local country club? Consider cutting out memberships that don’t really benefit you.
  41. Save your tax refund. In fact, you can have your tax refund direct deposited to your savings account.
  42. Adjust your withholding. Don’t want to wait until tax time to beef up your emergency fund? If you always get a refund, you could be having too much withheld from your paycheck. Talk to your HR department about adjusting your withholding. Then, put that extra cash from your paycheck right to your emergency fund.
  43. Stop eating out. Commit to only eating out for truly special occasions, such as birthdays. You’ll be surprised how much this could save over the course of a year.
  44. Consider a no-spend month. This Pinteresty trend is actually a great way to save money. You basically eliminate all but your essential spending for a full month. It can be an eye opening way to cut unnecessary spending long-term, too.
  45. Keep track of all of your spending. Sometimes you spend money without actually realizing it. Keeping track of all your spending, either with an app or by writing it all down, can help you pinpoint where you’re over-spending.
  46. Negotiate on everything. Whether it’s a retail store or your cable company, pretty much everything is negotiable.
  47. Share your home. Getting a roommate can really boost your savings. Or you can use Airbnb or VRBO to rent part or all of your house part-time.
  48. Save on energy. Take steps to make your home more energy efficient, and it’ll save you money month after month.
  49. Shop secondhand. Sometimes, you just have to buy stuff, whether it’s new cups to replace the ones your kids broke or a new pair of jeans. But these things don’t have to be brand new. Try shopping at online secondhand stores or your local Goodwill to save some serious cash.
  50. Celebrate milestones. Saving three to six months’ worth of expenses can take a while. So set some milestones–like your first $500 or $1,000–worth celebrating. (Just don’t blow a bunch of money on a fancy dinner out while you’re at it!)

With a goal to be financially independent, the first step is securing a cash cushion, accessible in emergencies. During this funding phase, it may be beneficial to make sacrifices that in other situations you would not make. A slight decrease in quality of life in the short term will likely outweigh long-term financial devastation when a future emergency arises.

Original published on April 14, 2008, this article was updated by the Consumerism Commentary editorial team (five of us to be precise) on November 15, 2017.

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Best Online Savings Accounts of 2018

This article was written by in Banking, Saving. 280 comments.

The best high-yield online savings accounts offer strong interest rates and great customer service, making them a popular option for savers. In addition, studies show online savings accounts come with lower fees.

best online savings accounts

“High-yield” is, unfortunately, a bit of a misnomer these days. A decade ago, interest rates were 4% and 5% among select savings accounts and money market accounts. Today, the best rates are around 1%, but some banks offer rates hovering near 0%! This trend will continue until banks and credit unions need more cash from depositors.

Banking Deal: Earn 1.75% APY on an FDIC-insured money market account at CIT Bank.

Interest rates

Interest rates are important because our money shouldn’t lose purchasing power. Ideally, interest rates offered by banks should beat inflation while preserving the balance without risk. I am not aware of any bank offering a savings option with ongoing interest rates high enough to beat inflation, whether measured by the government-reported CPI-U or by any other meaningful measure of consumer prices. Nevertheless, if your savings is at a brick and mortar bank earning below 0.25% APY, choose one of the better options below.

Best Online Savings Accounts

Customer service

When evaluating customer service, there are two important factors to consider. The best banks offer all account maintenance and transfers through a professional, reliable, and easy-to-navigate website. Secondly, live customer service representatives should be knowledgeable, helpful, and available, even if customers should not have to deal with a representative frequently.

Based on my own experiences and reviews from other Consumerism Commentary readers, here are the most-recommended accounts for short-term savings. All of the listed interest rates directly below from our partners and in the table above are current, although interest rates are subject to change by the banks. Although I have nine accounts listed below the table of rates, you don’t need to have accounts with that many different banks. Choose one that fits you the best.

At 1.55% APY, Synchrony Bank offers one of the highest rates available today on an FDIC-insured savings account. With no minimum balance required and no monthly service fees, it’s one of the most popular options. Click here for more details.

ally_120x60-002Ally Bank was selected by Kiplinger Magazine as the best savings account for 2009. Formerly known as GMAC Bank, Ally Bank provides an interest rate for their online savings account of 1.45% APY. Click here for more details.

EverBank has a variety of products including a high yield checking account, a money market account, and world currency CDs. All of these accounts offer top-tier interest rates. For example, first time account holders of Everbank’s Yield Pledge Money Market account earn a new account bonus rate of 1.50% for the first year. After the first year, the ongoing APY is 1.05% – 1.25% for account balances. And their Yield Pledge Checking Account for first time account holders for balances up to $100,000 offers a new account bonus rate of 1.21% for the first year and the ongoing APY is a standard 0.86% APY. Click here for more details.

FNBO Direct offers no fees and no minimum balance requirement. It is the online arm of First National Bank of Omaha. FNBO has an interest rate of 1.60% APY. Click here for more details.

Discover Bank offers a solid online savings account with a fast opening process. For example, I opened my account within twenty-four hours. The current interest rate for the Discover Bank Online Savings Account is 1.50% APY. Click here for more details.

CIT Bank was founded in 1908 in St. Louis by Henry Ittleson. Throughout the 20th century CIT continued to grow in all sectors. An FDIC-insured institution, it serves consumers and small businesses with certificates of deposit, savings accounts, and custodial accounts. CIT Savings account offers 1.55% APY on all deposits.

SmartyPig currently sports one of the better interest rates you can find online at 1.30% APY. You can also convert your savings goals into gift cards and earn an additional bonus for each gift card conversion. SmartyPig is not a bank by itself. It is a goal-oriented savings vehicle, a layer, that can be compared with other savings accounts.

Click here to start saving with Capital One 360!Capital One 360 offers no fees and no minimum balance requirement. Like ING Direct before it, Capital One 360 also has a great website and excellent customer service. I’ve found that managing your money with Capital One 360 is just as easy as it was with ING DIRECT. Capital One 360 offers a current interest rate of 1.40% APY .

Barclays is a large, international bank that has been around for 300 years, and operates in over 50 different countries. Barclays offers a 1.50% APY on all deposits, with no minimum balance and no monthly fees.

HSBC Advance offers no fees and no minimum balance requirement. Formerly HSBC Direct, it entered the race with one of the highest interest rates ever available at 6% APY. HSBC Advance Online Savings Account has an interest rate of 0.05% APY for $15,000.

Lending Club Investing offers a significantly higher return than most banks. Lending Club is a social lending site where you can invest in loans issued to individuals and businesses. The most recent average net annualized return for notes by grade A to C is between 4% and 6%. These investments are not FDIC insured, but Lending Club’s higher rates may be an alternative worth considering.

What is your favorite online savings account? Share your thoughts in the comments below.

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10 Easy Ways to Save Money

by Luke Landes
Saving strategies for the real world

This year, I’ve spent more money than ever. I’ve been able to swing these extra expenses — including lots of fun new gadgets I’d put off buying for years — without hurting my budget. But now, I’m ready to pull back and start ramping up my savings again. We all know that Americans are generally […]

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Trump’s Childcare Plan: How the DCSA Will Affect You

by Stephanie Colestock

Whether you’re taking care of multiple children, a disabled spouse, or elderly parents, you’ve likely experienced the high cost of dependent care firsthand. With expenses from babysitters to after school programs, it can be difficult to stay ahead of all your other financial obligations while spending on dependent care. To help make dependent care more […]

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Financial Upgrades You Need After Becoming Parents

by Robert DiGiacomo

New baby? No doubt this new arrival has turned every aspect of your life upside down in the best possible way. Now is the time to make sure your financial house is in order. Here’s a 10-step account and financial checklist to lay the groundwork for your little one’s successful future. New account checklist for […]

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New 529A Plans Help Disabled People Save Tax-Free

by Luke Landes

Now that the government backed down on its proposed changes to 529 plans for future education expenses, we can expect the same tax benefits present for education to be applied to families and individuals who face expenses caring for disabled people. Families will be able to deposit funds into special savings accounts, called 529As, and […]

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Prize-Linked Savings: Win Money For Opening a Savings Account

by Luke Landes

Since December, federal banks and credit unions have been allowed to offer savings accounts that include a raffle element, after some states have allowed accounts like these for some time. The goal of these lottery-like accounts is to encourage more people to save money, particularly those households with low and moderate incomes. This was the […]

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What Is the Best Savings Rate?

by Luke Landes

People like rules of thumb and quick answers. When a complicated question can be answered by an authority with a simple response, the reaction is likely to be one of two possibilities: a feeling of well-being and satisfaction if the questioner is meeting the requirements, or motivation to improve if the ideal situation is not […]

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