Your savings account

[Dave Grubb]

....should NOT be what it used to be

From this morning's WSJ:

If you have extra cash to stash away—either for an emergency or as the beginnings of a nest egg—a high-yield savings account can be a great option, providing an effortless way to build your savings, with essentially no risk.

For more than a decade, though, the trade-off for keeping that cash safe and at your fingertips was a paltry interest rate—or no return at all. It meant the difference between various savings accounts was negligible, and it was hard to keep up with inflation.

In recent years, that situation has changed. It’s true many savers continue to earn meager returns. The average savings account pays just 0.46%, according to the Federal Deposit Insurance Corp.—but with a little legwork, you can do far better. In fact, it’s not hard to find banking institutions that pay 10 times that amount. Today’s top savings accounts offer APYs of 5%, a rate that’s especially appealing considering inflation is around 2.9%.

Given today’s interest rates, taking the trouble to move your money can make a big difference, equivalent to about $500 a year for every $10,000 you have saved, according to Michael Finke, professor of wealth management at the American College of Financial Services. “If you’re not paying attention, you’re leaving a lot of money on the table,” he says.

Choosing the best savings account for your needs involves looking at more than just the advertised rate. You need to consider how you plan to use the account, how you prefer to bank and how much you plan to keep in savings.

[Phillbo]

I use a Vanguard Money Market account that is currently paying about 5% to hold short term cash for up coming expenses. It's just a way (IMHO) to protect it from a down turn that may happen when I need it.

[Sandman]

Just a holding pot.. Our Saving account is inbound funds only, if the “bad guys” acquire the needed numbers, the account cannot be drained.. have two checking accounts for outgoing.. the account that has autopay associated has no overdraft protection and is fed $$$ to cover expenses..

Just because I’m paranoid doesn’t mean that everyone isn’t out to get me..

Funny story.. when electronic tax filing first started we filed state income tax electronically.. on May 1 (Virginia tax day) We received a notice that an unauthorized withdrawal attempt had been received for our savings account (we then learned that savings was incoming only) .. our tax payment had been rejected.. in a panic I called the tax people in Richmond and cried my tale.. the taxman said, not to worry.. they are so far behind that if I get a check in the mail to them that afternoon that the check should clear before our rejected payment makes it to the top of someone’s task list.. he was right.. the check cleared in a few daze and about a month later we received acknowledgment of tax filing/payment..