Before she really became the girl on fire, Katniss Everdeen had to survive two Hunger Games. And both times she almost died for one lack of a simple thing: water. Before anything else, before finding a bow, or making allies, or fighting to save Rue or Peeta, Katniss had to find water. And if there is one thing you have to do to make sure your personal finances survive, you need “Capitolize” on one basic tool: open a high-yield online savings account.
Why should you open an online savings account? Three simple reasons.
You need an emergency fund. A place to hold reserve money if things get out of hand. Think a flat tire, a broken arm, a peacekeeper crackdown, a period of unemployment, or the sudden release of a leather-bound collector’s set of all three Hunger Games books. The general rule of thumb is three to six months of living expenses.
You should get an online savings account because the interest rates are so much higher than your bank on the corner. Online savings rates are up to about approximately 1.50% right now. The rate at your friendly neighborhood Bank of America is .03%. Now, neither of those numbers are huge. If you have $2,000 stashed away for one year in an online account, your money will earn about $30. If you have an account with $2000 at your friendly neighborhood Bank of America, that money earns 60 cents. Why not get that extra $30? You need that money saved anyway, in case something goes wrong or you need to make a big purchase. You might as well make it work a little bit. Just think of Prim’s goat: an investment that provides (milk/cheese) for very little effort on your part.
With online accounts, it’s easy to set up recurring transfers and forget about it. Put a little money away each month, $50, $100, whatever you can, and then let it just sit and grow and accrue interest. Because it’s online, it’s out of sight, it’s out of mind, until you need it. Also, because it’s online, it’s usually super easy to set up an account from the comfort of your couch.
There are several websites that can help you choose what savings account you want and make sure the interest rates are ever in your favor. One, bankrate.com, lists a whole bunch, with the interest rate and minimum amount needed . Make sure that you’re opening an account where the interest rate is high. Many of the big banks and credit companies are getting into the game, from Barclays, to Discover and American Express, to Goldman Sachs.
A couple things to keep in mind when you are deciding which one to go with. You want to make sure the bank is FDIC insured. You also want to make sure the bank doesn’t play around with interest rates, I’ve heard some (like Dollar Savings Direct), will have a high interest rate to start with in order to attract customers, and then drop the rate a few months later (which is such a President Snow thing to do). So there might be something to be said for sticking to big brand names. Also, keep an eye out for minimum deposit requirements, especially if you’re starting from scratch: you don’t want to be paying extra fees just because you don’t have much money yet. There are too many free options to choose from for that. And if you are sitting on a big chunk of change, some banks will give you a bonus to deposit it with them. For example, Discover offers $150 if you deposit more than $15,000 with them.
Myself, I have an account with Goldman Sachs. It has a competitive interest rate of 1.5%, it’s FDIC insured, and it’s free. Barclays, and Synchrony bank, a newer bank on the scene, both also have high rates. I’ve also heard Ally Bank has exceptional customer service and their rates are reasonably high.
So to recap, if you’re ever a tribute, find water, and if you’re not in the Hunger Games, open up an online savings account to save up an emergency fund and earn a little extra interest on that money. Who knows when you’ll need to act as a Sponsor?