Updated: Oct 24
Hopefully you’ve got a rainy day/emergency fund set aside for unforeseen expenses. Throughout the past decade with super-low interest rates it felt like this money was doing nothing for you except losing to inflation.
Well we’ve had some good news on that front: last year we saw interest rates rise quite a bit. One positive of this is that banks pay higher interest on deposits, so you can potentially earn more on the money you’ve got sitting idle.
However, not every bank automatically increases their rates on deposits.
For example, I’ve got a Chase savings account that is paying a whopping 0.01% annually. I’ve seen the same rate at Truist recently too. Compare that to Ally bank where current savings accounts are paying 3.75% annually.
Another option is a money market fund. A fund we use frequently is SWVXX–that is paying 4.68% annually at the time I’m writing this.
(CDs are another option for storing cash, but for the sake of the length of this post I've decided to leave them out.)
I’m not saying you should switch banks and totally revamp your financial plumbing to get an additional 1% interest on your savings. You still want to make sure the bank holding your money is solvent and has solid financial footing. But if you’ve got a good amount of cash stored up it’s worth at least taking a look to see if you could earn some more interest.