Savings account opened with reputed and trustworthy banks are the safest way of investing your money. It is completed secured and helps you to lock your money. There are many types of savings accounts like: joint savings account, regular savings accounts etc. You need to pick the savings account that suits all your requirements. Before picking one, you need to look at the saving account rates. You need shortlist certain financial institutions and then compare their saving interest rates with the help of comparison tools. The saving account rates vary from one bank to the other. Some banks might have high saving interest rates whereas the others might have low rates. Investigating the bank is really essential so that you can decide accordingly if it is really worth to drop your money in that specific bank.
How to compute saving account interest rate
- The initial step begins with consulting the recent bank statements in order find the average balance present in the account and rate of interest paid in a month.
- Secondly, you will have to divide the rate of interest which is paid by average balance in the account so s to calculate the monthly interest.
- Thirdly you will have to multiply the rate of interest in a month with 12 so as to get the annual rate of interest.
- Finally multiply this annual rate of interest with 100 so that the decimal value is converted into percentage.
The interest rates grow when you drop in a lot of cash in the savings account. Almost all the banks will pay you the interest at every month.
Comparing savings account rates
Use the reputed comparison website like Bankrate.com so that you can get to know which the best interest rate is offered by the financial institutions. It will help you to know about the interest rates, charges or fees, minimum deposit etc.
With the help of comparison websites, you will have to shortlist certain bank accounts whose interest rate entices you. Then you can visit the official websites of those shortlisted financial institutions and get to know about them in detail. Knowing about the interest rates exactly from the source is better because certain comparison websites might not have updated the interest rates of certain banks which have changed.
Get to know how the Annual Percentage Yield works. It is generally referred as APY. The APY is deeply connected with the current interest rates and thus you will have to know about them as well. APY is the interest amount earned with the account after a year. The savings account will basically make use of compound interests which literally means that each time the account holder pays an interest; it gets accumulated with the prior paid interest rates. In this way, one will be able to get high return after 1 year. APY is the most useful figure to look for when it comes to savings accounts. As there are many accounts with various interest rates, this APY will take the differences in consideration.
Apart from the interest rates, you will have to look on other factors as well. It is not necessary that the account which is paid with the high APY is an ideal option. No! There are some accounts which charge some hidden fees as well even if the APY is good. Hence you will have gather as many information about the bank so that you can know if it’s suiting all your basic requirements and will it be really worth taking the savings account with that particular bank.