Your Savings Account is Costing You Money

We know that not everyone is the best with money, but did you know that the majority of Americans actually have savings accounts which lose them money? It’s true. The national average interest rate for savings accounts is a mere 1.51% APY, whereas the cost of goods increases by 4% or 5% each year. As time goes on, the money in your savings account actually gets less valuable!

People think that long as their account balance is slowly inching up, they’re doing okay. Just because the amount of money is slowly increasing in the account, that does not mean that the purchasing power of the money is increasing. Because of inflation, money becomes less valuable over time, and if the interest rate you earn in your money is below that of the rate of inflation, the overall purchasing power of your money is decreasing over time.

A lot of savings accounts are just bad products, most Americans get stuck in undesirable savings account without even realizing it. They might compare what a couple of the major banks are offering for savings accounts, but that’s about it. They take the best offer they find, and don’t think much about it again. Other people aren’t concerned with how much interest they earn, because they don’t think they have any money to save.

Fortunately, there’s something you can do about it. You just have to ensure that the interest rate you are receiving is at or above the rate of inflation. This way the money the increased dollar amount in your account because of interest outweighs the decreased value of the each of the dollars in your savings account. There are plenty of good savings account out there which will put you well above the rate of inflation, you just have to go out and find them.

Most people would be very well off to go out and get an online savings account. These are savings accounts which are internet based and offer interest rates above that of 5%. Online savings accounts can offer much better rates because they do not have the overhead of branches and other fixed costs that most banks have. These accounts are just as legitimate as your local bank’s and they’re very easy to use. You can transfer money to and from your online savings account through the internet, making them a very convenient product to have.

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