We're thrilled to present this smart Kiplinger story here on Savvy!
If you need a safe place to park your money now, you have a surprising variety of options to consider — even if the returns on some of them aren’t pretty.
Don’t expect rates to move up anytime soon. In response to the still-sluggish economy, the Federal Reserve has announced that it will keep short-term rates near zero through mid 2013 — and maybe longer.
We’ve listed the top spots for eking out interest on your savings, depending on your tolerance for risk and how long you can tie up your money.
Money Market Deposit Accounts
For your emergency fund — at least three to six months’ worth of living expenses — and any other savings that need to be safe and immediately available, look to accounts insured by the Federal Deposit Insurance Corp., such as money market deposit accounts. Each account is insured up to $250,000.
Money market deposit accounts generally provide checks and an ATM card for withdrawing cash or to use for purchases. You can also transfer funds electronically to/from a linked checking or savings account. You are limited to six transfers per month, not including cash withdrawals at the ATM. With yields on money market deposit accounts as meager as they are -- the average account pays less than 0.3% — rate-shopping is essential.
BEST PICKS NOW: With a $2,500 deposit, you can earn 1.10% in a money market account at Incrediblebank.com, although you’ll trigger a $10 maintenance fee if your balance drops below $2,500. Other banks with good rates include AmTrust Direct ($500 to open an account) and MyBankingDirect ($5,000 to open an account). Both are affiliated with New York Community Bank, and both pay 1.15%, but at AmTrust Direct you need to maintain a $10,000 balance to qualify for that rate.