While you may be tempted to put your earned income into a jar or under the mattress, consider putting it to work for you instead. There are some great savings options available and based on how much you want to save and how accessible the funds need to be, this is a great way to actually earn some additional cash.
To help you compare savings options, check websites such as Bankrate.com or Yahoo! Finance for interest rates and fees.
A number of financial institutions offer many different types of savings accounts. Before selecting the one you want to put your hard-earned money into, ask a few questions:
If you don’t need immediate access to your funds you may want to consider a high interest CD. CD’s typically offer interest rates higher than savings accounts; however, they also require a minimum deposit. In addition, you must agree to leave the funds in the account for a specific period of time (three months, six months, one year, five years, etc.). In general, the longer the CD investment period the better interest rate you will receive, and there is often a penalty charged for early withdrawal. You should consider the CD’s auto-renew policy to determine if there is a short window of time to access your money before it enters into a new CD. Some banks may auto-renew funds into a CD with a lower interest rate than your best option based on changes in interest rates over the time of your initial deposit. If you invest funds over an extended period of time it is important that you stay up to date and regularly communicate with your account representative about the state of your funds.
There are a number of investment options for earning additional money on initial savings. While these may yield the highest rate of return, they are also typically the riskiest options. Some examples are mutual funds, bonds or money markets. For more information on investment options, visit some of the financial resources we have listed or consult a financial adviser.
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