Saving time and money makes a huge difference for every teacher’s success in and out of the classroom. So I’m excited to welcome guest writer Jamie Johnson, who shares how teachers can get the best savings account rate! Did someone say “cha-ching!?”
**This post contains Amazon affiliate links that pay a small commission to this site. Please see the full disclosures here.**
Why Your Savings Account Rate Matters
It can be challenging for teachers to come up with the best plan for saving money. According to the Bureau of Labor Statistics, the median income for teachers is $60,320 per year.
And many teachers have to make do without a paycheck during the summer months. For that reason, teachers need to make the most of the money they do save.
And one of the ways they can do this is by trying to earn as much interest on their savings as possible. Earning compound interest is one of the best ways to get ahead of your savings goals.
What is Interest?
For anyone who is focused on saving, the goal should always be to earn as much interest as possible. Interest is what allows you to earn income on the money youβre saving so you can maximize your returns.
Many teachers will opt to keep their money in a savings account. Thatβs because these accounts generate more interest than standard checking accounts.
But not all savings accounts are created equal, and different banks will offer different interest rates. So how can teachers know if theyβre getting a good interest rate on a savings account?
What is a Good Interest Rate on a Savings Account?
According to the FDIC, the average interest rate for a savings account is 0.09%. This rate applies whether you have a standard savings account or a jumbo savings account. A jumbo account has a balance of $100,000 or more.
The Federal Reserve has a significant impact on the current interest rates banks are offering. The Fed lowered interest rates three times in 2019, so right now, the interest rates are a historically low point.
However, it is possible to find high-yield savings accounts that pay much higher than the average. There are a number of online lenders that offer rates between 1.60% and 2.20%.
How to Find the Best Rates For Savings
If youβre a teacher and you want to earn more than the bare minimum in interest, there are options available to you. Listed below are a few tips on how you can find the best rates and maximize your returns on your savings.
Open an Online Savings Account
Brick-and-mortar banks tend to offer the lowest interest rates on savings accounts. So if you want to earn better rates, then you should consider opening an online savings account.
Online savings accounts donβt have many of the expenses that traditional banks incur, so they can offer more generous rates. And many online banks will offer perks for opening a savings and a checking account.
Ally Bank, Marcus by Goldman Sachs, and Synchrony Bank all are good online lenders for you to consider.
Look Into Alternative Forms of Savings
If you want to earn higher interest rates, then you donβt have to just stick with a savings account. Money market accounts and CDs and also good low-risk savings options, and will usually earn you more money in interest.
However, youβll need to read the fine print before you invest in either option. Money market accounts will often require that you maintain a monthly minimum balance to continue earning interest.
And when you sign up for a CD, you agree not to touch the money for a certain length of time. Most CDs come with early withdrawal penalties, which could wipe out any of your previous gains.
Consider Other Investment Strategies
Keep in mind that even a high-interest savings account is not going to significantly move the needle on your savings goals. Itβs a great start, and you should look for a savings account that pays you the best rates. But teachers should explore other savings and investment strategies as well.
Consider working with a financial planner who understands the unique needs of teachers. That person can help you come up with a long-term savings and investment strategy based on your income, savings goals, and risk tolerance.
More Money Making & Saving Tips for Teachers
If you’re looking for related content to help you make and save money as a teacher, these posts are for you:
- 35 Ways to Make and Save Money as a Teacher
- 4 Fantastic and Legit Work From Home Jobs for Teachers
- The Best Heavy-Duty Pencil Sharpeners for Your Classroom
- Are Erin Condren Teacher Planners Worth the Splurge?
- Amazon Prime Day Deals for Teachers
Pin this post to your favorite board!
Jamie Johnson is a Kansas City-based freelance writer who writes about finance and business. She covers variety of personal finance topics, including banking, investing, loans, and credit.In addition to writing for GOBankingRates, her work has been featured on Yahoo! Finance, Business Insider, and Quicken Loans. You can connect with her through emailΒ ([email protected])Β Β or social media.
