3 Steps to Get the Best Interest Rates and Save Money This Year
Do you know how much interest your money earns in your checking account? What about your savings account? On the flip side - do you know the interest rates you’re paying on all of your debts?
Something as simple as paying attention to the interest rates of your accounts can have a major impact on how you plan for your financial well being in the coming year.
Step 1: Take a Debt Interest Rate Inventory
It’s a good idea to take a quick inventory of all your debts at least once a year. This includes credit cards, mortgage payments, student loans, car loans, and any other money you may owe to third-party borrowers. We recommend using a spreadsheet or other program that allows you to easily sort columns, or if you only have a few, you may find pen and paper just as easy.
Once you have all your debts listed, you’ll need to find out the interest rates each of the borrower is charging. Add those into your data and you’ll begin to see which debts you’re paying more to borrow from. In most cases, credit cards are likely to be the highest interest rate chargers, with interest rates for student loans usually falling near the bottom, though this is by no means always the case.
Step 2 - Take an Asset Interest Rate Inventory
Just like you did for your debts, collect all of your savings assets. You can create a new tab in your spreadsheet or add another column to your sheet of paper. Wherever you have money saved - savings accounts, checking accounts, 401ks, IRAs, you’ll want to record it and again, do some research and find out the exact rate each of your accounts is earning.
Once you have a clear picture of your complete assets (money owed and money saved) you can start to make more informed decisions about how best to leverage your funds.
You’ll start to see where it makes sense to spend money – to pay off that high-interest credit card, for example – and where you can save some money and have it earn the most for you. After you’ve laid out a plan and prioritized which debts should be paid down first, and in what order, you can start doing some homework on interest rates.
Step 3 - Find the Best Rates & Re-allocate
By this point you know what you’re earning, so the next step is to find out if you could be earning more. There are a lot of savings options offered by different banks, and some of them incentivize you to save with them by offering pretty attractive interest rates. We highly recommend reading all the fine print that comes along with any and all accounts you’re investigating, just to be sure you have a grasp on all the details.
From simple savings accounts to money market accounts, you can record your top choices and compare and contrast the pros and cons of each, and the advantages of the accounts you already have. After looking at all this information, you may decide it makes more sense to transfer your assets into a higher-yield savings account or money market, like our DimeDirect Money Market which offers an industry-leading 1.20% APY.
Whether you’re thinking about switching some of your savings to a money market account, interested in looking into more appealing IRAs or just looking for some guidance on interest rates and fund allocation, you can always call on a Dime Community Bank representative (1-800-321-DIME) for more details, or stop by a branch near you.