I'm looking for a good savings account

[gogirlanime]

Hello I am new to this would someone please help me?

If you would either suggest a website, book, something like that to explain this to me.

I am looking to build as much interest on a savings account as I possibly can. What bank offers a high interest rate with a very low (like $300 or less) required beginning deposit amount? I am going to aim to save $3K by January 1st 2013. Also, how does interest work? So lets say I put $1,000 in a savings account on March 1st 2012 and I have an interest rate of 1% the $1,000 has to stay in there till March 1st 2013 to receive $10 on it? How does interest work?

Please and thank you

[jpg7n16]

For current bank rates, check the sticky at the top of the Investing forum: http://www.savingadvice.com/forums/i...ent-rates.html

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How interest works: Banks pay you for the priviledge of using your money to make loans. And banks are required by law to quote you a price called APY - Annual Percentage Yield. (ie. What your account would earn if invested for exactly 1 year)

Most banks accrue interest daily, and credit your account monthly. Let's use your example to see how that works.

You deposit $1000 on March 1st, 2012 with Acme Bank. You start earning interest that day at 1%. Now the 1% - is 1%/year after compounding. Doing some math, you'd likely earn around 0.083%/month.

The Math of Compound Interest
MathIsFun.com - Compound Interest

So your balance earns interest every day, and at the end of the month the bank pays you what they owe.

1000 * 1.00083 = 1000.83
1000.83 * 1.00083 = 1001.66
etc.

This repeats every month for a year, and after 1 year of compounding, your account will have earned $10.

Month 0: 1000.00 (beginning balance)
End of Month 1: 1000.83
End of Month 2: 1001.66
End of Month 3: 1002.49
End of Month 4: 1003.32
End of Month 5: 1004.15
End of Month 6: 1004.99
End of Month 7: 1005.82
End of Month 8: 1006.66
End of Month 9: 1007.49
End of Month 10: 1008.33
End of Month 11: 1009.16
End of Month 12: 1010.00

Now in reality, they base it off your average daily balance, and use a daily compounding amount (like 0.0027%/day) - but that's too crazy to do an example on.

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Now that we've discussed how interest rates work, why are you so concerned about the interest rate? Is that the only factor you're considering as you look at which bank to use? Do you have any debt?

[gogirlanime]

Thank you so so much for explaining that for me that was a big help. I am interested in the highest interest rate because it gives the biggest return. I've always assumed that is one of the main things people look for in a savings account, are there other things that are just as important. I know that, a good bank, nice services like loans, credits, things like that are important too but is there something else major I am missing?

BECU has a good rate, would you recommend them?

[bjl584]

Thank you so so much for explaining that for me that was a big help. I am interested in the highest interest rate because it gives the biggest return. I've always assumed that is one of the main things people look for in a savings account, are there other things that are just as important. I know that, a good bank, nice services like loans, credits, things like that are important too but is there something else major I am missing?

BECU has a good rate, would you recommend them?

It's going to be hard to find much better than 1% to 1.5% in a liquid savings account in present times. But some other things to consider is the customer service and convenience at a bank. Are you able to talk to a human being and not a machine? Do they have a branch close to you with convenient hours? Can you get money in a timely manner if you need to?

[jpg7n16]

In addition to what Brian said (the convenient one being most important on my list): What fees do they charge? (Checks? Debit card? Low balance? etc.)

Would be pointless to pay $10 for a debit card, $17.50 for checks and a small balance fee - just to earn an extra $20 on interest. Unless the super convenience of the bank made it worth the extra costs.

[Stump1000]

I use Ally online for a savings account. The rate was 1% when I got the account about a year ago. It's down to .85% now. I'm not really worried about the APY because there's only $4,000 in it right now. It takes two days to get money from that account to my local bank. I've been happy with them so far.

[kork13]

Rate shopping = not worth it (right now)

Honestly, there's not alot of variance in interest rates right now. No matter where you go, it's hovering somewhere between .25%-1% ... a range of $7.50 per $1000. Not exactly earth-shattering. Back in 2008 (before rates ... well, everything... crashed), the range was 1%-5%. In such circumstances, it was far more advantageous to seek out the best rates. At present, just pick a simple, reliable, customer-friendly online bank and you'll be fine. ING Direct, Ally, Discover, or others are all just fine, and you won't even notice the extra few cents you earn or don't earn.

[J. Spence Financial]

ive been using ing for year so i would look at them. but ally might have higher rates. it all depends on the sign up bonus for which i think that ing has a higher one right now.