NewburyportNews.com, Newburyport, MA

Community News Network

July 29, 2013

Online banks may help you boost your savings plan

Putting money away for a rainy day appears to be one of those quaint notions of the past, like Sunday dinner with the family or a hot meal on an airline flight. Currently a growing number of people live paycheck to paycheck. An unexpected expense can be catastrophic.

According to the U.S. Commerce Department, in 1970 Americans saved around 10 percent of their disposable income – disposable incoming being what is left after paying taxes, mortgage, insurance and other fixed expenses. In January 2013 the savings rate was down to 2.2 percent.

Data compiled by financial website NextAdvisor.com shows the average U.S. household has only $3,800 in savings. More distressing, 25 percent of households have no savings at all.

Saving money, of course, starts with a budget. You have to track your income and expenses and end up with a positive balance at the end of the budget period. Cutting expenses and increasing income will increase the amount of money that can go into savings.

Where to put your money

But where do you put your savings? Banks now have minimum deposit requirements and a host of fees that have discouraged some from opening savings accounts. The paltry interest paid is not much of an incentive either.

Polina Polishchuk, an editor at NextAdvisor, suggests looking at opening a savings account in an online bank. Unlike a traditional bank, she says online banks are more consumer-friendly.

“That's why we were for online savings accounts,” Polishchuk said. “They don't have fees. There's no minimum balance requirement, or requirements for how much money you have to deposit into the account every month. And the interest rates they pay are much higher than regular banks.”

They do pay a higher interest rate – though it can be considered high only in comparison to what traditional banks pay. The annual percentage yield (APY) is still under 1 percent. Still, it beats what the big banks are paying.

Text Only | Photo Reprints
Community News Network

Offbeat
NDN Video
'Hunger Games: Mockingjay Part 1' Sneak Peek GMA: Dog passes out from excitment to see owner Chapter Two: Designing for Naomi Watts Baseball Hall of Famers Inducted Florida Keys Webcam Captures Turtles Hatching Morgan Freeman Sucks Down Helium on 'Tonight Show' Robin Wright Can Dance! (WATCH) She's Back! See Paris Hilton's New Carl's Jr. Ad Big Weekend For Atlanta Braves In Cooperstown - @TheBuzzeronFox Chapter Two: Becoming a first-time director What's Got Jack Black Freaking Out at Comic-Con? Doctors Remove 232 Teeth From Teen's Mouth Bradley Cooper Explains His Voice in 'Guardians of the Galaxy' Deja vu: Another NYPD officer choke-holding a suspect 'Fifty Shades of Grey': Watch the Super Sexy First Trailer Now! Reports: Ravens RB Ray Rice Suspended For 1st 2 Games Of The Season Air Algerie plane with 119 on board missing over Mali Diamond Stone, Malik Newman, Josh Jackson and others showcase talent Free Arturo - The World's Saddest Polar Bear A Look Back at Batman On Film Through The Years
Special Features
NRA Waterfront Plans