gsx56

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Who of you are using any savings accounts with what is considered a high interest rate? who knows of the places to put money with high interest to let sit... all i have heard of is ING. Pleez let me know!
 

drumming207

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i have heard ira's are a good bet...but you have to have a chunk of change to start one (at least 2k, i believe). typically these are "used" towards retirement, but I think you are able to take your money out after a certain period without any penalties.

drumming
 

Claymore

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Typically, an IRA is not a suitable replacement for a savings account, as you usually incur penalties for withdrawing money before the IRA matures. Money put in an IRA is essentially "forgotten" about, as it grows tax-free and awaits withdrawal in 40 years. The benefit is that you get to invest in stocks/funds in a tax-sheltered manner whether you choose a Traditional or Roth IRA.

A better option that more closely mimics a savings account is a Money Market account...slightly higher yield than savings, sometimes with check-writing privileges. Most brokerages have these available.

If you have a little bit longer time horizon (at least 3 years, preferably more) and a little more money, consider investing in an index fund.
 
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mpp

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Money withdrawn from an IRA before age 59-1/2 will incurr a 10% penalty (meaning that any gain will be lost). However, you can take out money penalty-free for a variety of reasons including first-time home purchase, qualified educational expenses (includes tuition but not payments on student loans), disability, to purchase health insurance if you become unemployed and a few other esoteric reasons. You will also have to pay taxes on any gains. In addition, if it is a traditional IRA (meaning not a Roth-IRA) you will have to pay taxes on the money that was initially deposit since that deposit was on money before taxes were taken out of it. In general, investing in an IRA for the short term is a bad idea.

Right now, high-interest rate savings account are just not around. www.bankrate.com is a good way to compare different rates on interest-bearing accounts. Watch out for fees, minimum balance charges, etc., as every offer is not the same.
 

Vincristine

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gsx56 said:
Who of you are using any savings accounts with what is considered a high interest rate? who knows of the places to put money with high interest to let sit... all i have heard of is ING. Pleez let me know!
We have an ING organe savings account and I wouldn't say the rate is "high" at all. I think the current is 2%. It's times like this that I simply take solice in the fact that my private loans are at some rediculously low 5%, and I am far far more in debt than will ever be in my savings account!
 

Ryo-Ohki

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Credit Unions are the best places for high interest savings. For example, a local bank offers around .5% interest on a money market checking account. A credit union offers around 2.3%.

I bonds and EE bonds are another option. They also allow you to defer taxes on the interest.
 
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