Maximize your savings and reach your financial goals with these 4 innovative strategies. Discover the benefits of CDs, prepaid debit cards, checking account alerts, and no-fee savings accounts. Start growing your savings today
Questions Answered in this Article
Q: What are some alternative methods for increasing savings besides a standard savings account? A: Four alternative methods for increasing savings are using certificates of deposit (CDs), limiting spending with a prepaid card, monitoring your checking account with alerts, opting for a no-fee account, and reducing other expenses.
Q: What are the advantages of using CDs to save money? A: CDs can help reach savings goals by offering better annual returns compared to regular savings accounts and preventing the temptation to use the funds for other expenses with the added restriction of a penalty for early withdrawal.
Q: What is a prepaid debit card used for? A: A prepaid debit card can act as a payment method and a budgeting tool, allowing you to only spend the amount loaded onto it and avoiding dipping into savings to pay credit card bills.
Q: What are the benefits of receiving alerts for your checking account balance? A: Receiving alerts for your checking account balance can help in controlling spending, preserving your savings, and preventing overdraft fees by serving as a useful tool in managing spending.
Q: What is the advantage of switching to a no-fee savings account? A: Switching to a no-fee savings account can maximize savings by avoiding monthly bank maintenance fees and freeing up money to increase retirement contributions or pay off high-interest debt.
4 Innovative Ways to Grow Your Savings
A non-savings account saving strategy may seem unusual, similar to trying to stay fit without a gym membership. Just like you don’t need fancy equipment to exercise, you don’t have to rely solely on savings accounts to grow your savings. Despite the Federal Reserve’s recent rate hikes, many savings accounts may still offer low to moderate interest rates that may not result in significant growth. Thus, consider alternative methods for increasing your savings.
Secure Your Funds with Certificates of Deposit (CDs)
The advantages of CDs may not be immediately clear. Some may view them as a questionable investment, with the added restriction of a penalty for early withdrawal.
However, think of it this way: if your goal is to save $3,000 for a vacation, it’s best to set it aside and avoid touching it. If kept in a standard savings account, the temptation to use it for other expenses may arise. With a CD, the funds will be available when needed.
Furthermore, CDs with term lengths between 3 to 5 years generally offer better annual returns compared to regular savings accounts. Even short-term CDs can still aid in reaching your immediate savings goals, such as a vacation, despite slightly lower interest rates. Check out Edfed’s best CD rates to see available options.
Limit Spending with a Prepaid Debit Card
While on a well-deserved vacation, it’s easy to let loose and indulge in impulsive purchases. To prevent dipping into your savings, a prepaid debit card can act as both a payment method and a budgeting tool.
With a prepaid card, you can only spend the amount loaded onto it, avoiding the need to tap into your savings to pay credit card bills. The best-prepaid debit cards have no monthly fees and it’s affordable to load money onto them.
Stay on Top of Your Finances with Checking Account Alerts
Online banking has made it convenient to keep track of your finances and savings. Many banks offer the option to receive text or email alerts when your checking account balance drops below a set limit.
This feature primarily prevents overdraft fees but also helps in controlling spending and preserving your savings. You can set the limit at a level that suits you and adjust it as needed. Alerts serve as a useful tool in managing your spending and maintaining your savings.
Reduce Costs with a No-Fee Savings Account and Trim Expenses
A monthly bank maintenance fee of $12 may seem like a small amount, but over time it can add up. For example, if you were to put that money into a 401(k) account with a 6.5% rate of return and hold it for 30 years, you could end up with an extra $13,000.
To maximize your savings, switch to a no-fee savings account. Additionally, review your budget and make cuts where possible. Rather than resort to extreme measures, consider using the extra funds to increase your retirement contributions or pay off high-interest debt. Any small change in spending and saving habits can lead to substantial long-term benefits due to compound interest.
- Alternative methods to a standard savings account can increase savings.
- Certificates of deposit (CDs) offer better annual returns than regular savings accounts and can help reach savings goals.
- Prepaid debit cards serve as both a payment method and a budgeting tool.
- Alerts for checking account balances help control spending and preserve savings.
- Switching to a no-fee savings account can maximize savings by avoiding monthly fees.
- Cutting expenses and making small changes in spending and saving habits can lead to substantial long-term benefits due to compound interest.