You already manage so much of your life online, it just makes sense to manage your finances online, too. An online savings account can be a great way to save money and make progress toward your financial goals. Take a look at these 5 tips for making the most of your savings.
1. Know your online savings account features
With an online savings account, you can bank at your own convenience—check your balance, open a new account, transfer money, and more—from anywhere you have internet access. In addition, online banks often have lower overhead costs than traditional brick-and-mortar banks, so they can pass that savings on to you in the form of great rates. And with an FDIC-member bank, your deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum amount allowed by law.
2. Take advantage of compound interest
How compound interest works is simple: You earn interest on your principal and your interest. Over time, you earn interest not only on any additional deposits you make but also on the interest that the deposits earned. And that helps your savings snowball. Of course, the sooner you start saving, the faster your savings grows. Also, look for a bank that compounds interest daily rather than monthly or yearly so you can get the maximum benefit from that compounding effect.
3. Set up automatic savings
It’s easy to let your expenses eat up your paycheck before you have the chance to save. Online savings accounts make it simple to set up an amount for saving automatically through direct deposit or transfers from your checking account. For example, if you open an Online Savings Account from Ally Bank and also get the Interest Checking Account, you can have your paycheck deposited into your checking account and then set up automatic, ongoing transfers to your savings.
4. Develop healthy financial habits
Setting up automatic savings is a great way to reinforce a healthy financial habit, but an online savings account can help you create other good money habits, too. Use the convenient online access to monitor your progress and keep a close eye on your transactions. Because you always know what’s coming in and going out, you can adjust your spending behaviors to match your goals. You should also use your online account access to spot and report any unauthorized activity in a timely manner.
5. Know the requirements of your account
Your savings may not grow at its best if your balance is constantly hit with account fees. Make sure you know the terms of any account you open. Check to see if there are minimum deposit requirements or maintenance fees. Understand whether interest rates offered are only offered for a certain amount of time or for certain account balances. Carefully reviewing the terms of your account can help you grow your savings and avoid unpleasant surprises.
Last Edited: November 11, 2017