In case you haven't heard, saving is back in fashion. If you have gone to the bank and look at their interest rates, it is as if they do not want you to save. With paltry interest around 0.1 - 0.3%, one will not be motivated to save more money than they are motivated to stash their money underneath their beds. Fortunately, things have taken a turn - to your favor.
As a young student or fresh grad, you know that it is important to save but you'd rather invest in higher risk investments that give you more returns in view of the low interest rates offered by banks. However, most young people never gotten around to save and hence do not have the savings for investments, even if they want to. If the motivation to save is just what you need to get started, consider enrolling in a free internet savings account.
Unlike a normal savings account, an internet savings account can give you up to 8 times the national average savings return. For example, E*Trade is offering APR and ING Direct's rates range from 2.75% to 3.25% depending on your account balance. Now you see some sense, don't you? There is no minimum balance to maintain unlike some brick and mortar banks who charge you a fee for not having the required balance.
If you are keen on investing your money, you can link your E*Trade savings account to your E*Trade trading account that lets you buy stocks and trade. This can work two ways as even though your money is not sitting in any form of investments, they continue to make money for you in your high yield savings account. Rest assured that you do not need to be a trader to open a savings account with E*Trade.
The reason why these online banks are offering such high rates is because they do not have to spend money maintaining branches, hiring staffs, pay for utilities and printing costs. In that sense, they pass on a fraction of that saving back to it's customers to encourage them to save. As a young person, you'll even prefer their online banking business model such as paperless online statements, online bill payments and online funds transfer rather than the usual physical banking procedures.
Some online banks provide their users with an ATM card for easy withdrawal, but most do not. That is why you need to link your current savings account to your online savings account to deposit and withdraw money using the funds transfer facility. If you know you need some money for upcoming events, just transfer the money from your online bank to your usual account. On the other hand, if you have some money to spare, transfer them to the online high yield account to enjoy higher returns. Talk about flexibility and value!
Do not take your age as an excuse to delay your saving efforts. The smart thing to do is to save now so you'll end up with more money later. High yield online banking will help young people to get away from their 'spend now, worry later' mentality as it reward the good habit of saving. Currently, E*Trade is the leader in providing the most competitive rate to its customer. Get your free high yield online savings account in a flash and start saving right away.
By : Donny Fonseca
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