If you’ve got some savings set aside, now is the time to get that money working for you if it’s not already.
If you know money expert Clark Howard, you know that he's not a fan of big banks. And one look at the paltry savings rates they're currently offering is enough to get Clark riled up.
“If you have money in a savings account or a CD at any of the giant monster mega-banks or even a big regional bank, it means you hate yourself. Something happened to you as a child that makes you punish yourself. Do. Not. Do. It,” Clark says.
Why such strong advice? Because if your savings rates aren't rising right now, even though the Federal Reserve has raised interest rates, it may be because you're with one of those "giant monster mega-banks," as Clark calls them.
Savings Account Rates
Let’s Compare a Big Bank …
Here's a snapshot of Bank of America's Advantage Savings Account as of July 7, 2022. And we're not just picking on Bank of America. All of the major banks have similar rates, Clark says.
Bank of America’s Advantage Savings Account has the following features:
- $100 fee to open the account
- Minimum daily balance of $500
- Account may carry an $8 monthly service fee.
… to an Online Bank
In contrast, one of the online banks, UFB Direct, has savings account rates of up to 1.66% as of July 7, 2022.
UFB Direct is a division of Axos Bank, which made our list of best online banks. UFB Direct's savings account has the following features:
- No maintenance or service fees
- No minimum deposit requirement
- The 1.66% rate is variable and is set at the bank's discretion.
When it comes to certificates of deposit (CD) rates, the returns at the big banks are pretty low as well.
For example, Citibank's best CD rates are 1.50% (with a $500 minimum deposit), and that's the best we found among the major banks as of July 7, 2022. I found the rates at other big banks to be in the same ballpark.
Meanwhile, the CD rates for many online banks are approaching 2%, Clark says.
As an example, the one-year CD rate at Quontic Bank is 2.01% as of July 7, 2022. The minimum deposit is $500.
While the rates above are just snapshot examples, they serve to underscore how important it is to put your savings dollars somewhere they can grow.
What To Do With Your Money Right Now
Clark says it’s time for savers to act because inflation is eating away at the value of that money. “The opportunity is there now, after these 10 years of suffering from puny, punishing savings rates, for savers to start to be rewarded,” he says.
With inflation rising, Clark says you want to put your money in the following places:
Let’s explore each of those options briefly.
Series I Savings Bonds
“If you have up to $10,000 that you can set aside for a year or longer, buy the Series I savings bonds with it,” Clark advises.
According to TreasuryDirect.gov, the current rate for Series I savings bonds is 9.62%, which is good through October 2022.
If you're unfamiliar with Series I savings bonds, here are five things to know about them.
While Clark wants you to put aside a nice sum of money for Series I savings bonds, he prefers online banks for the money you need to access more quickly.
With online banks, you typically get:
- Lower rates and hardly any fees
- Mobile app reliability
- 24/7 access to your money
I mentioned Team Clark's list of the best online savings accounts. Here are some of the best high-yield online savings accounts.
Clark loves that credit unions offer very competitive interest rates and personalized customer service, which are some things he says you won’t get at many big banks.
More Banking Resources From Clark.com:
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