What You Should Know About Online Savings - Money Tip Tuesday

You probably already know that having a savings account is important. You can save up your money for your next big-ticket purchase, retirement, or an emergency fund. But did you know that there are loads of benefits to using an online savings account?

Here’s what you need to know about the benefits of online savings and what to look for. 

Links:

• Learn more about the benefits of an Online Savings account
• Check out TCU University for more financial education tips and resources!
• Follow us on Facebook, Instagram and Twitter!
• Learn more about Triangle Credit Union

Transcript:

Welcome to Money Tip Tuesday from the Making Money Personal podcast. 

To begin with, not only does an online savings account keep your money safe, it can also help you build wealth. Financial institutions will often pay you interest for keeping your money with them. The interest rate, which is a percentage, will be multiplied by how much money you have in your online savings account. The financial institute will then add that amount of money to your savings.  

You’ll also want to look at the annual percentage yield, or APY. The APY is how much money you will make on your balance, with compounding included. 

In other words, when you are looking for a place to keep your savings, you’re going to want to compare different financial institutions’ online savings rates and APYs. The higher the interest rates, the more money you will make. Online savings typically offer a higher interest rate than a traditional savings account so if you’re looking to earn a higher yield, try an online savings account. 

Keep in mind that rates are subject to change and are usually based on the Federal Reserve, so you will want to keep a close eye to see if your rate decreases; if rates decrease, you may want to consider switching where you keep your money. 

Another benefit of online savings is simple convenience. You can access your funds quickly within your online or mobile banking and can transfer money to and from other accounts instantly. All you need for access is a device and an internet connection. This is especially useful if you have an emergency and need to move some money fast. You don’t need to wait in line at a bank or on hold on the phone. 

Having your money in an online savings account isn’t just convenient, it’s secure too. If your financial institution is FDIC-insured, your money is safe in case the institution fails. It is insured up to $250,000 per account. If you bank at a credit union, your money is insured for the same amount through the NCUA. Since it’s a strictly online account, it’s also secured through encryption, as well as multi-factor authentication, which makes it more difficult for fraudsters to steal your money. Online savings accounts are just as secure as your other financial accounts. 

One thing you’ll want to look out for when shopping are the online savings account fees and minimum balance requirements. Some financial institutions have monthly maintenance fees or fees if your balance drops below a certain amount. These fees can take away any interest you might have earned in your savings. Look for a financial institution with no fees on savings. You also want to check the minimum deposit requirements. Some online savings accounts can require a minimum amount of money to open the account, which can range anywhere from $100 to $5,000.  

Our sponsor, Triangle Credit Union, offers an online savings account with no monthly maintenance fees and only requires a minimum of $100 to open the account.  

If there are any other tips or topics, you’d like us to cover, let us know at tcupodcast@trianglecu.org and don't forget to like and follow our Making Money Personal Facebook and Instagram pages and look for our sponsor, Triangle Credit Union on Instagram and LinkedIn to share your thoughts.  

Thanks for listening to today’s Money Tip Tuesday and be sure to check out our other tips and episodes on the Making Money Personal podcast.  

Have a great day!