The Union Recorder

Top Stories

July 29, 2013

Online banks may help you boost your savings plan

Putting money away for a rainy day appears to be one of those quaint notions of the past, like Sunday dinner with the family or a hot meal on an airline flight. Currently a growing number of people live paycheck to paycheck. An unexpected expense can be catastrophic.

According to the U.S. Commerce Department, in 1970 Americans saved around 10 percent of their disposable income – disposable incoming being what is left after paying taxes, mortgage, insurance and other fixed expenses. In January 2013 the savings rate was down to 2.2 percent.

Data compiled by financial website NextAdvisor.com shows the average U.S. household has only $3,800 in savings. More distressing, 25 percent of households have no savings at all.

Saving money, of course, starts with a budget. You have to track your income and expenses and end up with a positive balance at the end of the budget period. Cutting expenses and increasing income will increase the amount of money that can go into savings.

Where to put your money

But where do you put your savings? Banks now have minimum deposit requirements and a host of fees that have discouraged some from opening savings accounts. The paltry interest paid is not much of an incentive either.

Polina Polishchuk, an editor at NextAdvisor, suggests looking at opening a savings account in an online bank. Unlike a traditional bank, she says online banks are more consumer-friendly.

“That's why we were for online savings accounts,” Polishchuk said. “They don't have fees. There's no minimum balance requirement, or requirements for how much money you have to deposit into the account every month. And the interest rates they pay are much higher than regular banks.”

They do pay a higher interest rate – though it can be considered high only in comparison to what traditional banks pay. The annual percentage yield (APY) is still under 1 percent. Still, it beats what the big banks are paying.

Text Only
Top Stories
Poll
AP Video
Raw: Israel Bombs Multiple Targets in Gaza Veteran Creates Job During High Unemployment Raw: Cargo Craft Undocks From Space Station Widow: Jury Sent Big Tobacco a $23B Message New Orleans Plans to Recycle Cigarette Butts UN Security Council Calls for MH 17 Crash Probe Obama Bestows Medal of Honor on NH Veteran Texas Sending National Guard Troops to Border Hopkins to Pay $190M After Pelvic Exams Taped Foxx Cites Washington 'Circus Mirror' NASA Ceremony Honors Moon Walker Neil Armstrong Obama Voices Concern About Casualties in Mideast Diplomacy Intensifies Amid Mounting Gaza Toll AP Exclusive: American Beaten in Israel Speaks Obama Protects Gay, Transgender Workers Raw: Gaza Rescuers Search Rubble for Survivors Raw: International Team Inspects MH17 Bodies Raw: 25 Family Members Killed in Gaza Airstrike US Teen Beaten in Mideast Talks About Ordeal 'Weird Al' Is Wowed by Album's Success
Facebook
Twitter Updates
Follow us on twitter
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
Stocks
NDN Video
Obama: Putin must push separatists to aid MH17 probe Michigan inmates no longer allowed to wear orange due to 'OITNB' Adam Levine Ties the Knot Sebastian The Ibis Walks Beautiful Bride Down The Aisle | ACC Must See Moment NASA Ceremony Honors Moon Walker Neil Armstrong Faces of Souls Lost in Malaysian Plane Crash 105-year-old woman throws first pitch Man Creates Spreadsheet of Wife's Reasons for Turning Down Sex 'Weird Al' Is Wowed by Album's Success Rory McIlroy struggles, surges, wins British Open NOW TRENDING: Real life Pac-Man Explosions as hot air balloon crashes in Clinton DUI Driver Dragged to Safety by Officer After Walking Onto Busy Freeway Celebrities That We'd Like to Send to the Moon Spectacular lightning storm hits London Malaysian Flight Victim Was South Florida Grad Rory McIlroy on pace to break British Open records Officials Fear MH17 Site Now Tampered by Rebels Lowes employees repair Vietnam vet's wheelchair Widow of Staten Island man who died after NYPD takedown says he was unjustifiably targeted