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Ditch your local savings account and open an online savings instead

American Savings accounts are a personal finance staple in this country and have been for decades. Anyone who has ever opened up a bank checking account is usually automatically enrolled in a savings account as well. What is the purpose of these accounts? To put emergency savings into, a down payment for a house perhaps, or maybe fun money for that big vacation you’ll be taking in a few months.

All of the above reasons are fine examples of why you should save. However, the problem with today’s run of the mill savings accounts are that the interest generated and given on these is HORRENDOUSLY low. Just look at this chart posted by Ben Carlson at “A Wealth of Common Sense;” it shows that $8 Trillion (with a T) is held in savings accounts generating an average of 0.10%.

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On a $10,000 deposit you’re looking at a whopping $10 earned in a calendar year! That doesn’t even cover a dinner date for two at your local McDonald’s. Compare that with an online savings account with Capital One 360 Savings (currently 1% on deposits), or a Marcus Savings by Goldman Sachs (currently 2.15%). You could be earning 4 times what you’re currently earning today! Assuming the same $10,000 deposit, that $10 earned now turns into $215 in a calendar year! I don’t know about you, but that’s a huge difference.

That $205 difference could be a partial 1 month car payment, an extra principal payment on your student loans, a very nice dinner with drinks with your loved one or friends, or it could simply be reinvested to generate more interest. What can you really do with $10?!?

Big banks thrive on complacency and you being distracted. They know that it’s kind of a hassle to close and open accounts. They know that you’re busy and don’t have time to research and take action. But I’m here to tell you this process is not hard at all. Sure it takes a little bit of time and effort, but I think it’s totally worth the nice dinner and drinks all paid for by your new online savings account.

Your hard earned money SHOULD WORK HARD FOR YOU! There is absolutely no reason or excuse to be generating up to 4 times less on your savings just because you don’t have the time, or you really “like” your local bank or banker. Maximizing every dollar you have and leveraging it to your advantage is the name of the money game. The sooner you realize this, the sooner you’ll be on your way to creating a financial future that you’re in control of.

*** Please note that rates quoted come directly from www.capitalone.com and www.marcus.com. Rates are subject to change and terms and conditions come directly from these companies, not Franklin Star Wealth Planning (“FSWP”). “FSWP” does not receive any compensation or benefit from the listing of these financial products.