The answer is yes. Here are few expert tips from financial advisors on how to gain higher virtual savings interest rates—so your money can make you money while you’re off living life. Kerry Keihn, financial advisor and director of client services and operations at Earth Equity Advisors shares that a solid (current) interest rate to seek is in the range of 0.15 percent to 0.60 percent. Naturally, you’ll want to stay on top of the information your bank gives you as rates change. This way, you can make informed choices—including, if necessary, transferring your balances to another location where you’ll be earning the most. Ellen Li, CFP, MSNA, lead advisor and partner at Financial Alternatives recommends checking your current bank’s 1099-INT statement and going from there. “Sometimes investors think they are earning one rate, but the actual rate they are earning is a lot less,” she says. Li also echoes the earlier advice to keep tabs on fluctuations in interest rates. The rate from one bank might be competitive now…it might not be competitive at all in a year or two," she adds. Before you up and switch banks, take time to do your research to see what online bank is right for you—not only in terms of interest rate, but also in terms of accessibility, fraud protection, points and perks, and more. “Most online banking options have a lot of features and are user-friendly, but you want to be sure that by switching banks you won’t miss something you use regularly,” Keihn advises. Keihn urges consumers to take their time comparing fees at their current bank versus various other banking options. She points out that while online banks are more affordable than traditional in-person-only options and tend to have higher yields, they can come packaged with higher fees. Therefore, making the transition may not be worth your while. In addition to clocking those potentially steeper fees, Li advises savers to monitor the amount of money they plan on accruing in digital savings over time: Make sure it stays below the FDIC limit of $250,000. In addition, triple-check to make sure your online bank is FDIC-insured. Last but not least, in certain states, such as California, online banks may not support trust accounts. If that’s important to you, make sure you ask before switching banks. “In addition to evaluating a bank based on its fees and interest rates, don’t forget you can also evaluate how it aligns with your values,” Keihn adds. Just because online accounts are an app tap away, don’t overlook local branches as well as credit unions. “Local community banks and credit unions often have good interest rates with online banking features, and are important community players (some even provide financing for green home improvements),” she explains. All in all, opting for this type of two-part, hybrid savings account—with one account at a small local bank or credit union and another at a major online bank earning you high interest—may be your best bet to earn the most for your money while maintaining your peace of mind.
