Free Financial Planning Advice » Banking

Does The Best Bank Exist?

Chava — Sun, 20 Dec 2009 19:23:30 +0000

Everyone would love to know that their money is sitting in the best bank possible. Whether it’s a savings account, checking account, or CD, you want to be assured that your money is being properly cared for, safe, and if at all possible, growing at a great rate. Yet there’s no easy way to define what the best banks are. Every bank will offer deals and offers, as well as charge immense fees. It may sometimes be worthwhile to make use of more than one bank for various purposes in order to take advantage of all the great offers.

Best Bank Accounts
What accounts are best? It really depends what you want them for. A savings account might be best if you don’t need to make a lot of transactions, nor make use of a check book. These accounts sometimes offer good interest rates, especially if you’re willing to lock that money away for a year or more. On a checking account, however, “best” will have a different meaning. Low monthly fees, minimal if nonexistent transaction fees, free check books…those would be elements to seek.

Best Bank Interest Rates
Comparing interest rates in such a general way is practically useless. Interest rates may look incredible when you compare a savings to a checking account, or a CD to a checking account… but if you are looking for a checking account, the savings and CD rates are irrelevant. Compare like with like. That’s how you’ll find those so called best bank rates.

Best Bank Savings Rates
Even when you compare savings account interest rates, not everything is clear on paper (or computer screen). First, make sure you are comparing APY against APY or gross interest against gross interest rates. Additionally, you have to make sure that you won’t get charged incredible fees on the backend, completely eradicating any interest you might have acquired. You want the overall best bank account, not just the best rate.

Best Bank CD Rates
The best bank CDs are the ones that list the highest overall APY; the rate is not as significant. Since you won’t be touching the money until the certificate has reached maturity, the long term interest that will be accrued is of more relevance. Most CD’s have a penalty for early withdrawal. If you can find one that does not, you may have gotten yourself a better CD.

Best Bank Loans
The best loans are the ones that fit your income, monthly budget, and loan needs. There really isn’t a “perfect” loan. You want a repayment plan that won’t restrict your lifestyle. You want to be able to repay the loan within a foreseeable amount of time. You want a loan without fees coming to stab you in the back. Loans with lower interest rates are preferred, though if you need an unsecured loan (you can’t put a property as collateral), the interest rates will necessarily be higher.

Really, there isn’t one best bank. What you need are the best banking tactics. Learning to read all the information about a given account or loan, understanding some basic financial jargon, and being on the lookout for fees that might slap you in the back are helpful tips on beginning the banking experience. Also, don’t be afraid to move accounts or make adjustments when a bank changes its rates on you. Take your money into your own hands.

Are There Top Money Market Funds?

Chava — Sun, 20 Dec 2009 11:13:04 +0000

A money market, different from a money market account, is the trade in short term, low risk securities. These securities, such as certificates of deposits (CD’s) and U.S. Treasury notes. A money market fund is a mutual fund that trades it’s shares to purchase these securities. The income is then distributed to shareholders in the form of additional shares. It’s a fairly safe, conservative way to invest. Finding the top money market funds might be difficult, however.

Most investors are looking for quick ways to make big cash. Yet nowadays, even the top rated money market funds may not have a interest rate of 2%, or if you’re lucky, perhaps 2.5%. That might feel pretty depressing. Especially when some online savings accounts offer a 3.5% interest rate. Why use them at all?

One reason is that all of these funds, both low rated and top money market mutual funds, can be found in taxable and non taxable forms. While a savings account might offer a higher interest rate, the taxes you’ll pay might not bring you out any better at the end. A non taxable money market fund at a lower rate ultimately can sometimes bring in more cash.

Another thing to consider is the safety level. Since a money market fund is a security, if you buy through a firm covered by the Securities Investor Protection Corporation (SIPC), you’re covered even more than what the FDIC insures on a money market account. Even if your brokerage busts, you can be covered up to $500,000 in securities and up to $100,000 in cash. The FDIC insures only up to $100,000. Or perhaps $250,000 for retirement funds.

Some funds are bought through a mutual fund company. Others through retirement investment programs. When searching for the top money market fund, remember that depending on the program, there will be different qualifications in order to invest. Other funds allow deposits from individual investors. They are basically open to anyone. Also remember that funds come with investment management fees. Figure the fees into your calculation before deciding you’ve found the highest rate fund.

And good luck!

An Online Money Market Account For Safe Moneymaking

Chava — Sun, 20 Dec 2009 11:10:25 +0000

Investing, trading, getting involved in the stock market or real estate…all of these can be very lucrative moves, but also come with a certain risk. A simple, virtually risk free way to make a steady income is by using a money market account. An online money market account will compete for your business, as well, making the opportunity even more attractive.

Of course, first you’d like to know what a money market account is. Basically, it’s a savings account with a high interest rate. The bank, or money market fund, pays you a monthly interest rate simply for using their service. Usually, there is minimal initial deposit and/or a minimal account balance that you have to keep in order to keep the interest privileges. There may also be a maximum number of transactions you can make on that account per month. Over a period of time, however, you might be able to a accrue a decent amount of interest. That means you’re making money just by letting money sit!

In general, the higher the minimum deposit or account balance, the higher interest rate you’ll find. The best online money market account rates are therefore subjective. If you have a lot of money to deposit, say $10,000, you can find a rate and annual percentage yield of 1.5% or 1.6% percent. A minimum deposit account of $1 or no minimum deposit might only yield 1.2% or 1.3%.

Money markets are offered either by banks or credit unions. The safety of a bank is that their money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC). Even if the bank goes out of business, your money– or at least the vast majority of it– is insured and available. The FDIC insures funds up to $250,000. It is an independent agency of the federal government, in contrast to the National Credit Union Administration (NCUA), a federal agency that insures credit unions. Basically, your money is safer in a bank than a credit union.

The advantage of using such an account online is primarily about convenience. Easy depositing, withdrawals, and general access is facilitated by online technology. Fees and paper statements are usually significantly less with online money market accounts, as well.

Make sure that any money market you use is FDIC insured. Read reviews to feel confident that their site is easy to maneuver, customer service is up to par, and that there is a general positive rating. Then, let the money accrue!

Qualities Of A High Interest Savings Account

Chava — Sat, 19 Dec 2009 19:21:23 +0000

Perhaps the safest way to store your money and let it calmly accrue interest is in high interest savings accounts. By depositing your money in such an account, you are effectively putting your money in a bank where the bank will “grow” the money for you, at a specified rate. Of course, you want to know what the best high interest savings account is. Who offers the best rates?

Well, “best” will vary according to how much money you can deposit, how often you want to make transactions on the account, and some other minor details.

For example, you can fine an account offering a whopping (nowadays) interest rate of 3.2%, but that’s at a 2.65% bonus for the first 12 months. Meaning, after one year that gorgeous high interest rate savings account plummets into a fairly typical savings box. That 12 month bonus rate is a very common caveat on these tempting accounts. It doesn’t mean the account won’t serve you well; if there is enough money in that account the first year, you might gain a decent bundle, and depending on how low the rate will be after the first year, it may still be a worthwhile long term stop for your savings.

Another common downer on high interest saving accounts is the limitation on withdrawals. When you deposit money into an account, the bank effectively makes use of that money while you don’t need it. The more times per month you make withdrawals from the account, the less help you are of to the bank. So a high interest account will often have withdrawal restrictions. A restriction might take the form of limited number of withdrawals, or even no interest accrued in a month where a withdrawal is made.

Other accounts have great interest rates, even 5.0%, but require that you lock away the money for a year, two years, and sometimes more. If you are able to put away that money, this may be a great option.

The last common caveat on high interest rate savings accounts is the minimum deposit. Lower rated accounts may not have a minimum deposit, or a minimum of something like one dollar. Accounts with higher rates will often also require that the account maintain a minimum balance. That balance can range from $100 to $10,000. It can be anything really.

Some banks are even more exclusive. Their high interest saving account may be available only to clients who already hold another account with them.

What you need to determine is how much money you can deposit, for what length of time, and how often you will need to access the account. Other than that, it is imperative to choose only a trustworthy and experienced bank that is FDIC insured. That’s making a savings account really safe.