Online Savings Account Archives

March 8, 2021

Should I Choose a Checking Account or Savings Account?

Different? Yes. Complementary? That too. Learn when to use a checking or savings account.

Every day you make hundreds of choices. Should you wear jeans or dress pants to work? Eat a burrito or sandwich for lunch? Take public transit or hop in a cab? These may be easy questions to answer, but sometimes you get stuck on a question because you don’t know enough about the relative merits of one choice versus another.

This may be especially true when focusing on finances, particularly when comparing different types of bank accounts. It can seem like a puzzle, right? If you’re debating whether to open a checking account or savings account, you’re probably ready for a rundown of the benefits of each account type. The answer to the checking account versus savings account question will ultimately come down to how you intend to use your account and the funds you park there.

Make one of today’s choices easier by answering the following questions to decide whether you should choose a checking account or savings account:

Do you need regular access to your funds?

If you want to deposit money that you plan on regularly accessing for everyday spending, a checking account is the way to go.

If you're asking yourself "why should I open a checking account instead of a savings account?" it's important to research both types of accounts.

“If you anticipate heavy monthly traffic in your account from paying your bills—such as student loans, car loans, credit cards, auto insurance, mortgage—then it’s best to set up a checking account,” says Ogechi Igbokwe, founder of OneSavvyDollar, a website that helps millennials find jobs and make good financial choices.

Igbokwe adds that federal law limits the number of certain types of withdrawals and transfers from savings accounts.¹

checking account benefit to consider.

“Checking account holders have access to online and mobile banking, ATMs and the use of debit cards and checks to make purchases or withdraw funds from the account,” adds Alexander Lowry, executive director of the Master of Science in Financial Analysis program at Gordon College in Wenham, Massachusetts.

You can choose a checking account or savings account based on how often you'll need to access your funds.

You can still get access to online and mobile banking if you open a savings account, and you can have official checks drawn on your account. Bonus: If your savings account is at the same financial institution as your checking account, you could also use your debit card for ATM withdrawals. While savings accounts don’t often allow you to write checks for purchases, you can transfer or withdraw your funds ahead of time.

How much are you looking to deposit?

If you’re thinking about opening a checking account or savings account, it may be helpful to consider how much your money can earn in both accounts.

Since checking accounts don’t typically pay interest, they may be better suited for smaller balances. Still, some offer other rewards, such as Discover Cashback Debit, which allows you to earn 1% cash back on up to $3,000 in qualifying debit card purchases each month.²

Learn More

If you’re looking to open a checking account or savings account and want to deposit a larger amount of money—perhaps you want to build an emergency fund or are planning for a big financial milestone—you might want to put it in savings.

“[Savings accounts] are ideal for individuals looking to save while earning interest,” Lowry says.

Should you use both a checking and savings account?

While choosing a checking account or savings account depends on your financial needs, many people ultimately find that having both types of bank accounts is the best way to improve their money management and achieve their financial goals. According to a Discover Savings Survey, 41 percent of those using a savings account also use a checking account.

“Using a savings account can increase your propensity to save,” Lowry says. “On the other hand, checking accounts help you keep better track of what you spend. Thus the two accounts can work hand in glove to help set you on a better path to financial knowledge and stability.”

Take full advantage of your new account

If you decide to open a checking account, Lowry recommends managing your checking account wisely.

“A checking account is a primary tool for managing personal finances,” he says. “Be sure to realize the full opportunity it avails by signing up for direct deposit, signing up for online and mobile banking, taking advantage of alerts and arranging automatic payments.”

Now that you’ve figured out whether to open a checking account or savings account, you can move on to answering all the other question that pop up in a given day. We hope you’re pleased with the outcome of that burrito versus sandwich lunch debate, too.

¹Federal law limits certain types of withdrawals and transfers from savings and money market accounts to a combined total of 6 per calendar month per account. There are no limits on ATM withdrawals or official checks mailed to you. To get an account with an unlimited number of transactions, consider opening a Discover Cashback Debit account. If you go over these limitations on more than an occasional basis, your account may be closed. See Section 11 of the Deposit Account Agreement for more details.

²ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo^® and PayPal^™, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries. Venmo and PayPal are registered trademarks of PayPal, Inc.

Source: discover.com

March 7, 2021

Where Should I Keep My Money? Consider These 4 Bank Accounts

Katherine Pomerantz, owner of The Bookkeeping Artist, an accounting and financial strategy firm for small businesses and entrepreneurs, knows how easy it is to get stuck in a financial rut. While putting your finances on autopilot is a great way to relieve the pressure of managing bills, paying off debt and saving for the future, it’s possible to automate your finances so much that you miss out on new opportunities to make your money work harder for you. Pomerantz says plenty of her clients use a savings account, for example, but she likes to help them look for ways to “double down on growing their income.”

Could you also benefit from taking a fresh look at your finances? Maybe you’ve been putting money in the same types of bank accounts for years, but haven’t checked how much you’re earning. Or maybe you’ve increased your earning potential (congrats!) but haven’t adjusted your approach to saving accordingly. Your savings diligence is admirable, but it might be time to take stock of your financial strategy to see if there are other types of bank accounts you could use to maximize your money.

Ask yourself: Where is my money? Where should I keep my money? And, where should I keep my savings? As you review your answers to these questions, and think about moving your hard-earned dollars to different types of bank accounts, here are a few options to consider:

If: You use a checking account
Then: Consider a rewards checking account

Most people use a checking account because it’s an easy place to store money, pay bills and make small purchases. If a checking account (and debit card) is part of your regular financial routine, you may want to find an account that rewards you for using the account. Whether a bank pays interest on your balance or provides cash back on your debit card purchases, the benefit of a rewards checking account is that it lets you earn a little extra on the transactions you’re already making on a daily basis.

A rewards checking account is one of the few types of bank accounts that gives you cash back for your everyday spending

But choose carefully. Some types of bank accounts tie their rewards to high minimum balances, charge a monthly fee or limit rewards to transactions that require a signature. Be sure you know the requirements and, when asking yourself where should I keep my money, also ask yourself whether you can meet any requirements on a regular basis. Discover Cashback Debit allows you to earn 1% cash back on up to $3,000 in qualifying debit card purchases each month and has no monthly fees or monthly balance requirements.¹

If: You use a traditional savings account
Then: Consider an online savings account

A savings account is a good place for your emergency fund because the money can be easily accessed when you need it.² Interest rates, however, can be meager. Once you’ve saved enough to cover your immediate emergency fund needs, it’s time to ask yourself: Where should I keep my savings?

While interest rates are changing rapidly, online savings accounts may help you earn a better return. They’re similar to the accounts offered by traditional brick-and-mortar banks, but because online banks have lower overhead, they often offer higher rates. You may also be able to find accounts, like the Discover Online Savings Account, that have no monthly fees for maintenance or balance requirements. This means your savings can grow more quickly.

Burke Does, uses an online savings account because of the higher interest rate.

“I like that mine is at a separate bank from where I do my traditional banking,” Burke says, “because it makes it a little bit less tempting to use the money when it’s not actually an emergency.”

A CD can help you save for your goals— and it's a great answer to the question, "where should I keep my money?"

If: You have a money market account
Then: Consider a certificate of deposit (CD)

When comparing types of bank accounts, consumers may choose to save with a money market account if they find one with a competitive interest rate and enjoy the flexibility of withdrawing money when needed. Money market accounts can also be enticing when they offer check writing and debit card access.² If you’re just parking your money in a money market account and don’t actually need to make withdrawals, you may be able to earn more with a CD.

With a CD, you agree to leave your money in the bank for a set term. Typically, the longer the deposit period, the higher the interest rate. Chelsea Brennan, an investment professional and blogger at Mama Fish Saves, says the benefit of saving for shorter-term goals with a CD is that your money is more likely to remain committed to its purpose. Alternatively, when you can dip into the funds easily, as with a money market account (and some other types of bank accounts), “this only makes it harder to reach your ultimate goal,” she says.

A simple way to reach your goals.

Watch your savings grow with a CD.

Lock in Your Rate

Certificate
of Deposit

Discover Bank, Member FDIC

If the answer to where should I keep my savings leads you to open a certificate of deposit, note that you’ll be charged an early withdrawal penalty if you take out your money before the CD maturity date. You may want to avoid putting your money in a CD if there’s a chance you’ll need it to cover an emergency before it matures.

If: You use a 401(k)
Then: Consider an Individual Retirement Account (IRA)

An employer-sponsored retirement plan is an excellent workplace perk, especially if your employer provides a matching contribution. If you want to ramp up your retirement savings, you could consider contributing money to both a 401(k) and an IRA.

Wondering, "where should I keep my savings?" Consider an IRA to help build your nest egg

Opening a Roth IRA can be a way to diversify your retirement savings and create a tax-free stream of income for later in life, since distributions are tax-free in retirement. However, as you consider where should I keep my savings, it’s important to know that contributions to a Roth IRA are limited by income, regardless of whether you participate in other retirement plans. Contributions to a traditional IRA are tax-deferred now, but taxable in retirement.

Pomerantz, the owner of The Bookkeeping Artist, works with a married couple who is using an IRA to save for a home down payment. Normally, withdrawing money from an IRA before the age of 59½ means paying a 10 percent additional tax penalty, according to the IRS. But there is an exception if the money is being used to buy or build your first home.

Pomerantz says her clients already have retirement savings in employer-sponsored accounts. They were trying to save for a down payment for their first home, but kept dipping into their savings account for other purchases.

“They wanted to open an entirely separate account that they couldn’t withdraw from whenever they wanted,” Pomerantz says. “That’s when they thought of opening an IRA. Their savings grew exponentially,” she says.

If you’re considering opening an IRA for your retirement plan, keep in mind that you have more options to choose from besides Roth vs. traditional. For example, Discover IRA Accounts offer two distinct, but complementary accounts.

A Discover IRA CD generally offers higher rates at fixed terms, making it a good choice for a long-term retirement plan. A Discover IRA Savings Account, on the other hand, provides a retirement savings option that allows for flexible contributions and withdrawals. An IRA Savings Account, with no minimum balance requirement, is a great place to stash your retirement savings if you are just getting started and looking for an account that will work with any budget. Keep in mind that you may have an IRS early withdrawal penalty if you withdraw your finds prior to age 59½. Consider consulting a tax advisor to discuss your specific situation.

As you consider how to manage IRAs, note that an IRA savings account can also be a place to stash funds from a maturing IRA CD if you’re not ready to lock in another term.

Where should I keep my money?

If it’s been a while since you asked yourself where should I keep my money, it might be time to mix it up. Whether you want to keep your money accessible, or save it and let it grow, there are several types of bank accounts that can help you reach your financial goals. Whichever mix of accounts you choose, make sure to regularly check in and assess that your financial setup is aligned with your short- and long-term goals.

¹ ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo^® and PayPal^™, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries. Venmo and PayPal are registered trademarks of PayPal, Inc.

² Savings and Money Market Accounts may have limitations on the number of transactions out of the account. Check account agreements for more information.

Source: discover.com

March 7, 2021

5 Ways to Increase Your Earning Potential This Year

Want to make more money this year? Here are some things to consider.

There’s never a bad time to step back and review how things are going in your career: the new year, after a promotion (or lack thereof), the end of a quarter or following a stressful month. Even if you have your sights set on increasing your earning potential, it can be easy to get stuck in the daily grind and overlook proactive steps you could be taking right now.

Get motivated on the career front and consider these five tips to help maximize your salary potential this year:

1. Ask for a raise

It’s a pretty good time to ask for a raise. Really. According to the U.S. Department of Labor, the unemployment rate is low and employers are starting to boost salaries to attract workers. See how this can play to your advantage? Check out websites like Glassdoor.com or job postings in your area to find out how much employers are paying for gigs like yours. You can leverage that information when you talk with your boss, while highlighting the experience you bring to the table, to negotiate a raise and boost your earning potential.

If you’re nervous to pitch yourself for a raise, remember that hiring and training new employees has real costs. Keeping employees at a higher salary can be cost-effective when compared to the expense of recruiting and training someone to replace you.

If you don’t come out on top in a salary negotiation, proceed to tip two to increase your earning potential.

2. Explore new opportunities

Historically, employees believed the quickest way to increase their earning potential was to change jobs. While there are no guarantees your salary will increase, there are several estimates that indicate the possibility. According to one estimate, the average raise an employee receives for leaving is between a 10 percent to 20 percent increase in salary.

When it comes to looking for a new job, an immediate boost to salary may not be the only financial consideration. A Gallup study found, more than a salary increase, the top reason U.S. workers consider new jobs is to, “do what they do best.” Switching jobs might lead to being more engaged with the work you do, as well as having opportunities for advancement and the ability to learn and grow. Down the line, a promotion or new skills can mean increased earning potential.

3. Find a mentor

Having an idea of where you want your career to go—this quarter, next year or in the next decade—can pay off enormously, but you don’t need to make these plans all alone. A good mentor can provide feedback or advice based on his or her own experience, and help ensure you’re on target to increase your earning potential. It may sound like a sweet deal, but it’ll take some effort on your part:

First, reflect (on your own) about how your career has been going. It will help you have a more meaningful and effective conversation with your soon-to-be mentor. This reflection worksheet is a good starting point.
Second, find a professional organization or meetup group for your industry that matches up mentors and mentees. By meeting people in your industry whom you don’t directly work with, you can have candid conversations about how your career is going, your strengths and weaknesses, and ways to maximize your salary potential.
Third, once you’ve connected with a potential mentor, set up an initial conversation. Don’t forget to ask if they’d be willing to talk again in six months or so.

4. Start a side hustle

A side hustle is a flexible job you do “on the side” that can increase your salary potential. Of the many ways to earn money outside of your main job, starting a side business can be a valuable option. The business skills you learn as an entrepreneur can pay off in other parts of your career. You could also give freelance work or consulting a go, leveraging skill sets you already have to help problem solve for other companies.

With any second job, however, it’s easy to fall into a trap of trading your time for money without improving your skills in a meaningful way. Weigh the pros and cons to ensure you’re balancing the desire to increase your salary with the desire to advance your career. Take driving in a ride share program, for example. Pro: It can be a quick and easy way to increase your earnings. Con: It may not benefit your primary career if you work in a very different or unrelated industry.

5. Learn to code

Coding can be something learned at any career stage to help boost your earning potential in short order. When analyzing its graduates, CodingDojo, a coding boot camp, found that more than half of students were earning less than $35,000 before entering the program. After graduating, the majority of students earned salaries that topped $70,000.

There are free online classes where you teach yourself to code or programs as short as one month where you can learn from a pro all the coding basics you need. Even if an industry switch isn’t in your future, understanding the basics of coding could improve your ability to work with technology, data, programmers and engineers.

Increase your earning potential

Whether it’s with your current employer, at a new company or as your own boss, you should be utilizing your skills where they are appreciated most. By making a conscious effort to invest in your existing skills and develop valuable new ones, you can help increase your earning potential every year—not just this one.

Open a savings account and have it at the ready to make the most of your increased earnings.

Source: discover.com

March 7, 2021

Why Your Debit Card May Be the Secret to Building Good Money Habits

A debit card isn’t just for spending. It’s also a tool for getting your finances on track.

Many people view their checking account as their primary tool for everyday spending and bill pay. Great. But few realize the piece of plastic that comes with your checking account can help you build solid spending habits. Yep, we’re talking about the power of your debit card.

“The main advantage of using a debit card over a credit card is you’re spending money you actually have,” says Josh Hastings, founder of personal finance blog Money Life Wax.

“When my wife and I discuss our budget, we base it on the money we have, not the money credit might allow us to have,” he says.

To build good money habits with a debit card—and even spend less money with a debit card—try these three tips:

1. Monitor your spending

Budget boundaries are huge if you want to spend less money with a debit card.

Tracking your spending habits can help you spend less money with a debit card.

“Tracking your spending is one of the quickest ways to develop good financial discipline,” Hastings says. If you’re spending with debit, plan to regularly check in on your account balance and transaction history by logging into online or mobile banking.

You can also try a financial app to build good money habits with a debit card, says Matthew LaMont, a financial advisor with Periscope Financial in Roseville, California.

“Most banking apps offer spending analytics to help categorize your transactions,” he says. Budgeting apps that sync with your checking account may also have this feature.

“Knowing where your money is going is the first step to being able to redirect it to where you want it to go,” LaMont adds.

2. Remove the temptation to overspend

Since you’re not handing over physical cash to make your purchases, Hastings says debit cards can lead to an “out of sight, out of mind” mentality if you’re not careful.

To ditch overspending and to build good money habits with a debit card, consider setting up email or text alerts for new debit card purchases. This can encourage you to get in the habit of viewing your debit card like cash, and you may be tempted to spend less money with a debit card when there’s a regular reminder of what’s coming out of your account.

To build good money habits with a debit card, Hastings also recommends avoiding impulse buys. Try imposing a 48-hour debit rule to think about a purchase before committing your funds, scheduling no-spend days on your calendar or simply leaving your debit card at home if you know you won’t need it.

To prevent impulse purchases and spend less money with a debit card, follow the 48-hour debit rule to think about a purchase before buying.

Spending temptation can also hit when you’re shopping online. Ever load up your online shopping cart with more items than you really need? Applying the 48-hour debit rule can help you decide if those items are must-haves, and if it’s a no-spend kind of day, you’ll need to give your online purchases some extra thought before completing that order.

3. Let debit and savings work together

If you’re striving to build good money habits with a debit card, consider linking your checking account to your savings account. This can make it simple to schedule transfers if you have extra room in your budget for savings. Bonus: Scheduling automatic transfers from checking to savings can reduce the temptation to spend funds you have earmarked for other goals (starting an emergency fund or saving up for a big vacay, maybe?).

Linking your accounts could be problematic, however, if you get into a routine of moving money from savings to checking to cover unnecessary or out-of-budget debit purchases.

“Savings is designed for just that—saving,” Hastings says. “Transferring savings to your checking when you’re running low doesn’t promote positive financial habits. It actually encourages bad ones,” he adds.

Spend less money with a debit card

A debit card can be a useful tool for managing your finances. But to build good money habits with a debit card, you’ll need to use it wisely. Having the right mindset and understanding why you’re spending with debit, rather than cash or credit, is helpful for keeping your spending in check. Remember that when you spend less money with a debit card you may have money left over in your budget to save and pursue your financial goals.

Source: discover.com

March 6, 2021

What Is A Typical Down Payment On A House?

January 5, 2019 Posted By: growth-rapidly Tag: Buying a house

A typical down payment on a house is 20 percent of the home’s purchase price. For example, if you’re thinking of buying a house worth $350,000, a down payment then would be $70,000.

But let’s be honest here, not too many people, especially first time home buyers, have that kind of cash saved up.

If you don’t have the expected 20 percent or typical down payment, don’t lose hope yet – you may qualify for a mortgage loan as low as 3 percent (more on this later).

If you are interested in comparing the best mortgage rates through LendingTree click here. It’s completely free.

Why the 20 percent down payment makes sense?

Related Resources:

The 20 percent down payment rule (although not the only option available for home buyers) has several benefits.

The first benefit of putting a 20 percent down payment on a house is that you have a greater chance of getting approved for a mortgage loan.

The second benefit is that you may qualify for a lower mortgage interest rate.

Another advantage is that you avoid private mortgage insurance (PMI). The third benefit is that you make smaller monthly payments.

Click here to compare mortgage rates through LendingTree. It’s completely FREE.

How to avoid the typical down payment on a house?

As beneficial as the 20 percent down payment may be, however, there are several other ways to make a much lower down payment on a house. After all, not too many people have a lot of cash stashed away. If you have little cash saved up for a down payment, consider these options.

1. FHA Loan.

One of the best ways to avoid the typical down payment on a house is to apply for an FHA loan. An FHA (or Federal Housing Administration) loan is a government-backed mortgage. It requires lower down payments and lower credit score.

So, for to qualify for an FHA loan you just need a minimum credit score of 580 and 3.5 percent down payment. If you have a lower score than a 580, let’s say 500, you may be required to put 20 percent down.

There are several requirements attached to an FHA loan. The most important one, however, is that you have to pay private mortgage insurance or PMI. A PMI is just a protection for the mortgage lender from a loss in case you default from the loan.

So, do you have to put down 20 percent on house? The answer is “No.”

Click here to compare FHA loan rates today.

2. VA (Veteran Affairs) Loan.

Another way to avoid the typical down payment on a house is to apply for a VA loan. In fact, there is no money down and there is no private mortgage insurance. However, in order to be qualified, you have to be a qualified veteran, an active duty service member, or a member of the National Guard and Reserves. In addition to being a qualified applicant, you’ll to pay a loan fee between 1.25 to 3.3 percent. However, that fee can be rolled into the loan.

Compare home loans to find the best mortgage rates.

Saving tips for a down payment on a house

Before you start saving money for a down payment on a house, see how much house you can afford by comparing mortgage rates. Below are some tips on saving money for a down payment on a house:

1. Pay off your debt. The first place to start in saving for a down payment on a house is to get rid of your high interest credit card debt first. Once you’ve paid it off, your savings will be much freer. Plus, you’ll also improve your credit score by paying off your debt.

2. Get a side hustle. Starting a side gig can be a great way to earn extra cash. This extra cash can help pay smaller bills or can go right into your savings account. From starting a blog to tutoring on weekends to completing surveys, there are plenty of ways to make extra money.

3. Put away extra money. Any extra money you receive, or a larger portion of it, should go to your ‘down payment’ savings. For example, a bonus from your job, a tax refund, a gift from your relatives, etc…You should place that cash in an high yield online savings account to earn you some interest along the way.

4. Spend less. One of the best ways to save more money is to reduce your expenses. You can stash away extra cash by living below your means. So make a budget to determine how much you’re spending each month on food, entertainment, clothing, transportation, etc… and see where you can cut back. Perhaps, you really don’t need that cable. Could you put off going on vacation this year and save that money instead?

Conclusion

Now that you know what a typical down payment on a house is, your goal then should be to start saving for it. Also note that you don’t have to put 20 percent down. If you can’t come up with that 20 percent down payment, then explore other alternatives like applying for an FHA loan. In that case, you will have to buy a private mortgage insurance (PMI).

Click here to compare mortgage rates through LendingTree. It’s completely FREE.

Learn more:

Working With The Right Financial Advisor.

You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

Related Resources

Source: growthrapidly.com

March 6, 2021

4 Benefits of Using Online Savings Accounts

Why use a savings account? We’ve got 4 reasons for you.

Shopping for groceries. Dropping the kids off at school. Going to the doctor’s office for a checkup. Sometimes, it can feel like your to-do list is never-ending. How do you pencil in time for managing your savings account? Sure, in the past, opening a savings account and making deposits and withdrawals required numerous trips to a brick-and-mortar branch. And just like at the post office, if you arrived at the wrong time, you could get stuck in a lengthy line.

Nowadays, online savings account benefits include convenience and efficiency, and you can quickly and painlessly open an online savings account and manage it on-the-go. Since you no longer have to spend time commuting to and from a bank branch, it’s easier to enjoy the benefits of an online savings account (think online transfers¹ and direct deposit from your paycheck). This convenience will leave you with more time on your to-do list to better manage your finances. You could even check in on your online savings account while shopping for groceries, idling in the drop-off line at school or waiting for that doctor’s appointment.

Online savings accounts let you manage your account from anywhere

When you’re considering your savings, the following benefits of an online savings account should be top-of-mind:

1. You can actually earn interest

When you’re thinking about online savings account benefits, you’ll want to consider interest. A bank will pay you an interest rate (noted in a percentage) multiplied by the total amount of money deposited and maintained in your savings account. This percentage, the interest rate, can change over time. For example, an interest rate increase means higher interest rates for banks on the money they deposit at the Federal Reserve (the central bank for the U.S.). Higher interest rates for banks may mean higher savings account interest rates for consumers, too. If the Federal Reserve lowers its benchmark interest rate, it’s possible that banks will also lower the interest they pay on their savings accounts.

When you are shopping for a savings account and comparing online savings account benefits, you’ll want to consider the annual percentage yield (APY) in addition to the interest rate. The APY is the amount of money you’ll earn on your account balance over the course of a year, with compounding factored in.

Online savings accounts often offer higher rates than traditional banks

2. You can grow your savings without monthly fees

Many banks charge a monthly maintenance or account fee if your balance falls below a minimum threshold. They may also require you to make a certain number of direct deposits each month in order to avoid a fee. With savings account interest rates still relatively low, these bank fees can easily eat up any interest you earn on your savings. If you open an online savings account with no monthly maintenance fee, you can rest easy knowing that this online savings account benefit lets your funds go to work building interest to reach your financial goals. For example, the Discover Online Savings Account, winner of NerdWallet’s 2020 Best Savings Account Award, comes with no account fees. Period.²

3. You can easily access your money¹

Sometimes, an emergency pops up and you need to dip into your savings to cover an unexpected expense. Your car breaks down and needs critical repairs. Your basement floods during a downpour. The cold you can’t shake requires a trip to the doctor. Being able to access your savings when you need to is one of the biggest benefits of an online savings account or an emergency fund (money set aside in a separate account to be used for emergencies only).

A benefit of an online savings account, for example, is that you can access your account online or with your mobile device. Anytime, anywhere. This allows you the convenience of being able to deposit money and view your balance and account activity on-the-go. You may also be able to transfer funds from your online savings account to your checking account or a different savings account.

An online savings account is a great place for your emergency fund to help cover unexpected expenses like medical bills

You should note that federal law limits certain types of withdrawals and transfers from savings accounts.¹ It’s always best to check with your bank to make sure you understand its policies.

4. You can set up automatic deposits to steadily build your savings

You earned it.
Now earn more with it.

Online savings with no minimum balance.

Start Saving

Online
Savings

Discover Bank, Member FDIC

Saving money on a routine basis can be a difficult habit to form, but it doesn’t have to be. One of the benefits of an online savings account is that you can take your willpower out of the equation by setting up weekly or monthly automatic deposits from your checking account into your online savings account.

By automating your savings, you take the thinking and effort out of saving and reduce your temptation to spend that money elsewhere. The amount you automate doesn’t have to be large. Over time, the deposits will add up, and don’t forget about the interest you’ll be earning on those automated deposits. It’s a great way to maximize your online savings account benefits.

There are many benefits of using an online savings account, including freedom

The benefits of an online savings account make it worthwhile

Not all savings accounts are created equal. Online savings account benefits such as competitive interest rates, no monthly fees for maintenance and easy access to your account aren’t offered by all banks. Take the time to shop around and find the best fit for your needs and financial goals. Once you open a savings account online, you can start earning interest toward your goals right away.

¹ Federal law limits certain types of withdrawals and transfers from savings and money market accounts to a combined total of 6 per calendar month per account. There are no limits on ATM withdrawals or official checks mailed to you. To get an account with an unlimited number of transactions, consider opening a Discover Cashback Debit account. If you go over these limitations on more than an occasional basis, your account may be closed. See Section 11 of the Deposit Account Agreement for more details.

²Outgoing wire transfers are subject to a service charge.

Source: discover.com

March 6, 2021

What Every College Student Should Know About Saving

Think you’re too young to save for the future? Think again.

You may be able to ace the big test after a late-night cram session or get a gold star on you term paper after putting it off until the final hour. But when it comes to saving? Not so much.

A simple money saving tip for college students is to start now

In fact, the earlier you start saving, the more financially confident you’ll be. True story. Yet many college students struggle to get in a savings groove. Balancing your studies and social life can get pretty time consuming, after all.

Here are four simple steps you can fit into your college schedule today to build good savings habits with long-term payoff:

1. Understand why starting now is critical

Time really is money when you’re in your teens and early twenties, thanks to compound interest. Compound interest means your money has the ability to start making you more money because you’re earning interest on previously earned interest.

College student savings accounts should be without fees, have competitive interest rates and offer mobile banking

To see how saving small now can pay off big down the road, crunch the numbers with a savings calculator. You’ll find that stashing away money in your college years will make your long-term financial goals far easier to reach than if you wait until your mid-to-late thirties to make saving a focus.

Haven’t worked out your long-term financial goals just yet? No problem. By saving now, you’ll have money in the bank when those goals become more concrete.

2. Choose the right savings account

You need to find a place to put your money (other than below that dorm room mattress). Look for a savings account with few or no fees that offers a competitive interest rate.

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The more interest you earn on your savings, the more your money will compound over time. This compounding effect is how you can accelerate the amount of money you build up in your account without any additional work on your part.

Choose an account with an institution that offers mobile banking and lets you set up automatic transfers from your checking account to your savings. Make it your goal to open your new savings account within the next week.

3. Start a monthly contribution

Next, set up automatic deposits to your savings account. Set a small goal to start—even a reoccurring transfer of $10 per month from your checking account is better than nothing. Start with what you have and what you can do, and build from there.

College-aged women shopping

Automating these transfers means consistently and easily adding to your savings. There’s no need to schedule reminders each month, and the money won’t be sitting in your checking account, tempting you to spend it.

4. Look for more ways to save

The fastest way to save more is to cut expenses. Look for inexpensive or free alternatives to pricey items and activities, and cut out small expenses that add up over time. While you’re at it, try to limit unnecessary and impulse purchases (online shopping, anyone?).

When you’re ready to do even more, look for ways to boost your income. That might mean working a part-time job or picking up more hours at your current gig. With your newfound savings knowledge, you’ll be better prepared to put that additional cash toward your financial future.

Source: discover.com

March 5, 2021

Tips for Spending Less While Raising a Family

It’s no secret that kids can be expensive, so here are some simple ways to save a little extra.

It’s no secret that raising kids is one of life’s most expensive undertakings. According to CNNMoney, it can cost nearly a quarter of a million dollars on average to raise a child born in 2013 to the age of 18—not including college tuition. The good news is there are ways to ease the strain on your bank account by reducing both daily expenses, such as food, and also larger ones, like housing.

These tips can help you save money while raising your family.

1. Cook at home

For the first time last year, Americans spent more money dining out than buying groceries. Takeout and restaurants are convenient for tired families, but the costs of prepared food can pile up quickly. Eating more home-cooked meals is one surefire way to limit food costs. Cook in bulk so you can lean on leftovers on busy nights.

2. Shop secondhand

Kids outgrow clothing and toys quickly, but you can stop the cycle of constantly buying new items. Arrange a clothing and toy swap with other parents, accept hand-me-downs from friends with older kids, buy clothing from consignment shops, and keep an eye out for local, online yard sales on social media. You may be surprised at how easy it is to find a pre-owned version of what you need—at a fraction of the price.

3. Set limits on extracurricular activities

Extracurricular activities like sports leagues and art and music lessons can do wonders to enhance a child’s skill set and social circle. However, out-of-school activities tend to be costly. While it’s typical for parents to cover these expenses, it’s not unreasonable to set limits. For example, offer to enroll your child in piano or guitar lessons, but not both.

4. Keep housing costs within your means

Housing is likely the biggest expense in your family’s budget. The trick is making sure your housing costs are not consuming an outsized portion of your income. Many financial experts recommend spending no more than 30% of your after-tax income on housing. As your family grows, it may seem like you need more square footage, but that may not be the most practical resolution. Rearranging furniture and clearing out clutter can do wonders to unlock new space in your existing setup.

5. Look for alternatives to your existing childcare

If housing isn’t your biggest budget item, childcare likely is. The Economic Policy Institute reports that most families live in areas where childcare is unaffordable, or the cost exceeds 10% of the average family’s budget. To find the best option for your family, compare the cost of a few choices—daycare, nanny or nanny share, or even having one parent stay at home full time—to see what makes the most sense. Find out if your employer offers a Dependent Care FSA PDF Opens in new window., which allows you to contribute pre-tax dollars toward daycare costs, and ask your accountant whether you qualify for the Child and Dependent Care Credit.

There are a number of ways to cut the cost of raising a family, but even so, you will likely find that those costs only rise as your kids get older. One way to get ahead of future expenses may be to make regular deposits into a savings account. When a large expense rolls around, you’ll thank yourself for having extra money on hand.

Source: discover.com

March 5, 2021

Take Advantage of the Financial Power of Youth

Retirement may seem like a long ways away, but the sooner you start saving, the better.

If you’re in your 20s, it’s likely you’re facing many financial responsibilities — college loans, rent, and car payments strain a paycheck that only goes so far. And, understandably so, it can be difficult to invest for retirement when you’re just starting out. But the younger you are when you begin, the more likely you are to achieve the goal of financial security later in life.

So do yourself a big favor, and start making financial moves now that will help maintain your peace of mind in the decades leading up to retirement. As part of that initiative, spend a few minutes reviewing the roles a Discover account — such as a Discover Individual Retirement Account CD — could play.

Young woman reviewing her retirement savings

Time and Money

The word “compounding” describes what happens when you allow investment returns to accumulate, potentially boosting the value of your account and giving it the potential for even greater growth in the future. Because of compounding, the more you save when you’re young, the more you are likely to have when it’s time to retire.

When You Change Jobs

Younger workers are also likely to change jobs several times early in their careers. According to the U.S. Department of Labor, the average worker holds about 11 jobs between the ages of 18 and 44¹. And with those transitions comes the temptation to “cash out” of a former employer’s retirement plan by taking a cash distribution. However, that strategy could have negative long-term implications.

For example, cash distributions from a retirement plan are subject to a mandatory tax withholding of 20%, which your former employer must take from your account balance and pay to the IRS. Also, a 10% penalty may be imposed if you leave your employer before retirement age.

On top of that, “cashing out” any long-term investments from your former employer’s retirement plan account could leave you shortchanged when you need the money most during retirement. A better idea might be to leave the money in your former employer’s plan or transfer it to a new employer’s plan (depending on plan rules). You could also “roll over” the money into a tax-deferred Individual Retirement Account (IRA).

Young people entering the workforce can take advantage of the financial power of their youth

Regardless of the specific strategy you choose, keep in mind that planning for the future by maximizing retirement account contributions when you’re young is almost certainly more productive and less stressful than waiting until retirement is just around the corner.

Discover

In addition to offering IRA CDs to help you grow your retirement savings, Discover also offers an Online Savings Account to help you with your short-term savings goals and a full range of CDs to help you save for the future. Open an account online in minutes or call our 24-hour U.S.-based Customer Service at 1-800-347-7000.

The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.

¹Bureau of Labor Statistics of the U.S. Department of Labor, September 2010

Source: discover.com

March 5, 2021

4 Things to Consider Before Combining Finances With Your Significant Other

A joint account is a shared responsibility, so be sure you’re both on the same page.

The deeper into a relationship you get, the more important talking about money and combining finances with your significant other become. So romantic, right? But if you and your significant other decide to move in together, or get married, then a conversation about combining your finances is natural. A joint account is a shared responsibility, and—if something doesn’t work out—possibly one with lasting repercussions. Exhibit A: Nearly one-third of adults with partners say money is a major source of conflict in their relationship, according to a survey by the American Psychological Association.

Significant others talking about combining finances Even though you’ll be sharing with the person you love, there’s no need to rush into a joint bank account without getting on the same page. Make sure you and your partner have a deep conversation about your finances first so you know it’s the right choice. For both of you.

Not sure how to break the ice and talk money? Try these four topics to get the conversation going before combining finances with your significant other:

1. What’s the financial situation?

Most people don’t talk openly about the state of their finances, except perhaps with a financial professional. As relationships develop, however, it’s important to be realistic about both partners’ finances in order to establish equal footing. This is one time when you don’t want personal finances to be too personal.

Consider sharing your credit scores, and understand if either of you has debt that would be taken on by the other upon combining your finances. Discuss each other’s attitudes and willpower when it comes to spending—and saving. All of this can help give you a clearer view into how you may function together to manage your money. You may even learn a thing or two about your own financial approach in the process.

“Combining finances can even improve money management because it opens up the lines of communication between partners,” says Lauren Greutman, author of The Recovering Spender and founder of LaurenGreutman.com.

Nearly one-third of adults with partners say money is a major source of conflict in their relationship, according to a survey by the American Psychological Association.

2. Will you have joint and separate accounts?

Many couples choose to have shared accounts while maintaining individual ones. If you decide to open a joint account, think about whether you want to open just a checking account, or if a shared savings account meets your goals, too.

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With multiple accounts of any combination, it’s good to break down how each will be used. Know which accounts receive paycheck deposits, for example, and how the shared account will be funded. If a joint account is for shared bills (rent, utilities, food), decide how bills will be paid. Do both parties transfer money into the account to cover bills as needed, or is there an amount deposited automatically with each paycheck?

What about other joint expenses, like vacations? Will you fund your retirement with a joint account, or will you go solo on that venture? It’s best to get these questions answered before you combine finances with your significant other to avoid confusion or disagreement down the road.

3. Who manages the joint account and what are the “rules?”

If you choose to combine your finances and open a joint account, it’s important to discuss how it’s managed and by whom. Nobody loves rules, but establishing each person’s responsibilities with your joint account can go a long way toward avoiding future conflict.

Let’s say you open a joint checking account for shared bills. While you may both deposit money into the account, you could consider putting one person in charge of making sure those bills get paid. Maybe the other person is responsible for ensuring the balance statement is correct each month.

Additional rules can also help avoid unnecessary arguments and impulse purchases. Maybe you commit to discussing purchases when they are over a certain dollar amount.

“My wife and I set a limit each week on how much ‘spending’ money we each have for things we like to get ourselves,” says John Rampton, Founder and CEO of the online digital wallet, Due.com. “Giving each other an allowance means we cut out arguments on what we spend that money on.”

4. How will you deal with problems along the way?

Having a clear view into your joint finances doesn’t mean there won’t be hiccups here and there. It just means you may know about them sooner rather than later, and you’ll know how to address them with your partner. If, for example, you don’t have enough money in your account to cover bills, having a plan as a team can help.

“If your money is combined, you have to talk about it because of the risk of overdrafting the account, not having enough money and about future plans with where to spend the money,” Greutman says.

If you notice your joint account is trending low on funds, sit down and go over your joint budget. See if there are areas that can be adjusted. It might mean economizing where possible or increasing the amount going into the shared account. Either way, talking through the situation will help you come out ahead each month.

Communication is key

Combining finances with your significant other is a big step in any relationship. Even if you decide to keep your finances separate for now, you will have an easier time talking with your significant other about your financial needs. If you do decide to open a joint account, being able to communicate will allow you to pick an account that will help meet your shared goals.

Source: discover.com

Do you need regular access to your funds?

How much are you looking to deposit?

Should you use both a checking and savings account?

Take full advantage of your new account

If: You use a checking accountThen: Consider a rewards checking account

If: You use a traditional savings accountThen: Consider an online savings account

If: You have a money market accountThen: Consider a certificate of deposit (CD)

If: You use a 401(k)Then: Consider an Individual Retirement Account (IRA)

Where should I keep my money?

1. Ask for a raise

2. Explore new opportunities

3. Find a mentor

4. Start a side hustle

5. Learn to code

Increase your earning potential

1. Monitor your spending

2. Remove the temptation to overspend

3. Let debit and savings work together

Spend less money with a debit card

Why the 20 percent down payment makes sense?

Related Resources:

How to avoid the typical down payment on a house?

1. FHA Loan.

2. VA (Veteran Affairs) Loan.

Saving tips for a down payment on a house

Conclusion

Learn more:

Working With The Right Financial Advisor.

Related Resources

1. You can actually earn interest

2. You can grow your savings without monthly fees

3. You can easily access your money1

4. You can set up automatic deposits to steadily build your savings

The benefits of an online savings account make it worthwhile

1. Understand why starting now is critical

2. Choose the right savings account

3. Start a monthly contribution

4. Look for more ways to save

1. Cook at home

2. Shop secondhand

3. Set limits on extracurricular activities

4. Keep housing costs within your means

5. Look for alternatives to your existing childcare

Time and Money

When You Change Jobs

Discover

1. What’s the financial situation?

2. Will you have joint and separate accounts?

3. Who manages the joint account and what are the “rules?”

4. How will you deal with problems along the way?

Communication is key

If: You use a checking account
Then: Consider a rewards checking account

If: You use a traditional savings account
Then: Consider an online savings account

If: You have a money market account
Then: Consider a certificate of deposit (CD)

If: You use a 401(k)
Then: Consider an Individual Retirement Account (IRA)

3. You can easily access your money¹