While just about everyone has a savings account, that doesn’t mean it necessarily makes sense as a permanent feature of one’s financial landscape. Instead, consider other places you can keep your money that may come with far more benefits.
If you absolutely know you won’t need your money anytime soon, there’s almost no good reason to keep it in a savings account. Instead, you should commit the money to a long-term CD (a.k.a., long-term certificates of deposit). Doing so almost always guarantees you a much higher return without the risk that comes with investing it elsewhere. Keep in mind, too, that in the worst-case scenario, you can still retrieve your money from most CDs, so long as you pay a small penalty.
You’d also probably be surprised to find out that prepaid credit cards make a lot of sense as an alternative too. Find those that come with FDIC-insured savings accounts and then look for the options that come with the highest interest rates. Many will pay you around 5%, which is a lot for such a small investment on your part. Of course, unlike CDs, you’ll also never be separated from your money.
Another good option that won’t carry too much risk is putting your money into mutual funds. While this isn’t the type of investment that will make you rich overnight, your money will definitely grow much faster than it would in a savings account. Do the right research and you’ll also have very little to worry about where mutual funds are concerned.
Finally, sometimes the best place for your savings is being used to pay down debt. Most of us have a healthy amount of it, which only gets worse over time with interest. You have to make payments on it anyway, so why not use excess capital to pay down the principle?
Although savings accounts certainly make a lot of sense, you should explore all your options to ensure you make the most of this money.