How to boost your savings account
Have you checked your savings account interest rate lately?
- If not, you could be missing out on some extra cash.
The big picture: While rising interest rates to combat inflation have made mortgages and loans more pricey, they've also pushed some savings account rates above 3%.
- The national average is just 0.33%.
Why it matters: Detroiters face disproportionately high basic costs for property taxes, auto insurance and utilities — making every dollar critical.
- Families with savings between $250 and $749 are less likely to be evicted or miss a housing or utility payment if their income is disrupted, a 2020 U of M report on Detroiters' financial well-being found.
What they're saying: "It's a great time for consumers," NerdWallet's Chanelle Bessette tells Axios. "There's a lot of comparison shopping to be done to get the best rate."
By the numbers: If you start with $5,000 in your savings account and save $100 a month, your account would be about $1,000 fatter after five years with a rate of 3% compared to .7%.
- Use an online savings calculator to see how your account can effortlessly grow.
Zoom out: Americans are collectively missing out on billions of dollars by keeping their money in savings accounts with rates well below 1%, the Wall Street Journal reported last month.
- Despite skyrocketing rates elsewhere, the biggest U.S. banks "are still paying peanuts to savers" — yet some consumers maintain low-yield accounts because they are unaware of alternatives or see switching banks as a hassle.
The bottom line: "Whether you're wealthy by standards of America or wealthy within yourself, each of those dollars you work very hard for and you should look at how you optimize those dollars," Kenneth Kelly, chief executive of Detroit's First Independence Bank, tells Axios.
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