Updated: Dec 13, 2019
Changing your savings account can multiply your return by hundreds of times or more!
Let's Get Hyped Over Savings Accounts
Savings accounts generate something we all love, passive income. This means that it'll generate more money for you while you put in little to no effort. The more advanced we get into saving money techniques the more we learn that we want less money held in these accounts, but for the person who hasn't made this move yet this can make a tremendous difference. The book, "The Compound Effect" is a great study on why. In fact, the national average for savings account interest rates is 0.10% according to the FDIC (This number will change and you can follow the link to see what it currently is). This leaves marvelous potential for increasing our average with some of the options we mention below.
Some of The Best Savings Accounts
Each of the following accounts pass our search criteria and have great reviews
Citi - 2.05%
Capital One - 1.8%
Synchrony Bank - 1.8%
American Express - 1.75%
Marcus by Goldman Sachs - 1.7%
Ally Bank - 1.7%
Savings Accounts Criteria
When looking for savings accounts I have a search criteria.
No Minimum/Low Minimum Balance
High Interest Rate
No required actions
Fees will tear away at your gain, naturally. There might be a point where your fee is a trade off for an exceptional rate but I have yet to see one rewarding enough (we'll leave that for you to do the math). Minimum Balances have tripped me up in the future. They can lock your money in which can make you lose out on potential profits. Although the minimums are usually between $1-25 and won't mean much, sometimes they also do not gain interest which lowers your overall return (We'll save that math for another day). Lastly, some banks may require a specific action like make 5 deposits/withdrawals a month (which can usually be easily evaded by buying $1 amazon gift cards) but I prefer not to have to spend my time doing these items or risk a lower rate.
What Should Your Interest Rate Be
Inflation is usually around 2.1% and your savings account should therefore at least keep up with that. The real answer is that you want it to be much much higher than that but anything below this percentage is losing money over time.
Some banks will offer referral programs that will help keep the positive motion moving. Usually banks will offer money to both you and the person you refer as an incentive for their business. Additionally, there might even be a sign on bonus for opening accounts and I've even seen some that outpace investing if you can believe it but that's for another time.
Usually banks have a clause for closing an account before 6 months. If you were to do so because you didn't like the bank you could be hit with a small fine, usually something around $25. So make sure to read reviews and ask friends. I have personally used Ally bank and love them.