Savings - finally makes cents

Do you know that the number of people saving today has decreased dramatically since the days of the early 1900's? We were actually saving more back then than we are now. Maybe it's because we're just not sure how to do it and do it right. Believe me, I always knew about putting money in the bank, but that's where it kind of stopped. Where do I put it? How does interest work? Won't I be better off if I just stick it in my wallet?? haha

Actually there are places where you can earn a nice return just for putting your money away in an account in a bank. Well there are too many banks, which one do I put it in? Let's go for a quick lesson on Savings.

Savings accounts are offered by most banks for free. You open the account by giving them some basic information, then you are able to deposit your money and they will give you a small amount of interest on the money you deposit. The more you deposit, the more money they will give you in interest. But wait, why does it have to be small? Right now, the interest rates on savings accounts are not very high, they're actually less than 1%.

Wachovia Savings: .15%
Bank of America: .20%
HSBC: .25%
Commerce Bank: .25%
Chase Bank: .40%
Webster Bank: .50%

Hey, it's better than how much you make from sticking it under your mattress! Ok, so maybe there's a better way. There is, it's called online banking, but before you jump to put your money in the highest interest account out there check this money girl's advice.

Many of the online banks are actually just a supplement to the regular banks. Many of the regular ones offer online savings accounts. One you may have seen is HSBC Direct. They're offering 6.00% on all NEW money. Don't miss that word, New money. If you already bank with HSBC, this deal won't pertain to you.

Bottom line: Pretty good deal, but the tiny print is a little scary. The 6% yield is only up until April 30, 2007, after that it will vary (read lower) and you are not allowed to have more than $2,000 in the account. So much for a big return.

Citibank also has one, called Citibank Direct. They offer another higher interest rate at 4.65%. It touts itself as a "no fee" account but only if it is a stand alone account meaning you don't have any other accounts with Citibank. They also say you will get a bonus of $50 if you sign up, but you must be a first time Citibank account holder.

Bottom Line: Nice deal for first time Citibank account holders, but know this rate varies too and may not stay the same.

How about E-Trade? Yes, they have an online savings account too. Problem? They do not have FDIC. This in the short form is insurance that protects your account for up to $100,000. E-Trade has something else that protects the money, but you'd best read the fine print on their program and see if it works for you. Want me to decipher it for you? Let me know and I can help consult with you.

Find out how you can make free money just for opening an account.
Read about my personal picks.
Where do I think you should put your money for a first savings?

Now here's the diamond in the rough, and something I use personally. ING Direct. Yes the orange ball bank. haha This is a bank that is primarily online, although they do have some concrete locations in major cities. ING is easy to set up, you can do it all online. As long as you have an account to transfer money from into this account, you can do it. They offer awesome interest rates and you don't have to worry about being a first time customer to get their great rates. They are a member of the FDIC, so your money is protected. Best yet, their rates have stayed at a higher level than the competitors.

Bottom Line: This is my personal top pick. Here's a special gift from me to you. Since I'm part of ING direct already, if you decide to open an account through ING with an initial deposit of $250 or more, you will receive an extra $25 free into your account, but only if you email me first. You can email me directly at kmoneygirl@gmail.com with your name and the email address that ING should send your special link to so you can receive the free $25. Without that link, you won’t be able to receive the bonus.