Lifestyle Upgrades

Perhaps you’ve seen a TV ad here and there advertising some great rate on an online only savings account or certificate of deposit.  HSBC Direct, ING, and E-Trade come to mind for me.  E-Trade loves to tout the fact that their savings account yields 8 times the national average.  Well that sounds very impressive, and if it motivates you to find a better place to park your savings, then great!  But don’t sign up just yet…

Use BankRate.com to find the best opportunities, and check that these opportunities are relatively safe.  First, go to the checking and savings tab, and be sure to select “High Yield MMA/Savings”.  This will show you all the high yield savings products available.  Very many of these products are FDIC insured, and the site also shows you a star rating to indicate how “safe and sound” the institution is.  This information can be accessed separately as well.

Here is a checklist of things to watch for when evaluating these accounts.

1) FDIC Insurance — As I said, most if not all of what’s on BankRate is FDIC-insured, but it would be negligent not to double check.

2) Safe and Sound star rating — 3 or more stars indicates that this institution shows no signs of trouble.  Bank failures that make the news are rare, but I do recall NetBank going belly up in 2007, but this bank had a one-star rating long before that happened.

3) Annual Percentage Yield (APY) – Superior returns…this is why we are bothering with this in the first place! 

4) Minimum Balance Required to Open  — Many have no minimums.

5) Fees — Many are no fee accounts.

6) Number of Withdrawals Allowed Per Month — These accounts tend to be dressed up money markets, and as such typically restrict withdrawals to somewhere in the area of 3 to 6 per month.

7) How to Make Deposits and Withdrawals — In order to give you these great yields, most of these products are online-only, meaning that you link them to a checking account at another institution and transfer money to and from the savings account online only, but some of these will offer a debit card for withdrawals as well.

The king of this space is ING Direct.  Despite the fact that they are not at the top of the APY list, lots of folks seem to like them because of the additional features they provide, such as sub-accounts for specific savings goals and linking to multiple external accounts.

You can also repeat this process to find the best deals on certificates of deposit, but in today’s interest rate environment, you may find that that the yields you can get on a CD are not much better than what you can get on a savings / money market account.

Happy saving!

Here are four more tactics you can try when shopping online to go along with the first two.  A couple of these new tips are obvious, but a couple of them are a bit less straightforward and less reliable.

1) Walk away from the deal.  I am really surprised at how often this works, but I guess that I shouldn’t be.  In a real life sales negotiation, when the prospective buyer annouces his intention to walk away from the deal, suddenly a better deal might be presented to him.  Quite simply, fill out an order form, and close your browser without submitting the order.  Sometimes you’ll get a popup or an email offering you a discount to complete your order.  Now if you weren’t expecting this, it can be a subtle form of manipulation that closes the deal…but if you were actively trying to induce a better offer, just smile when it comes…and if it doesn’t come, you’ve lost nothing.

2) Split or cancel an order.  Think of how often you buy something, only to receive a discount coupon for your next purchase.  If you intentionally split an order into two pieces, you can apply the “future purchase” discount to something that you planned on buying anyway.  This seems a bit risky, because if you don’t get a discount coupon, you might have to place two orders and get charged more for shipping.  But of course, if you don’t receive a discount coupon for future purchases, simply cancel or amend your original order before it ships and again you’ve lost nothing.

3) Search for the lowest price via competitive bidding sites such as CNET (tech), Pricewatch(tech), MySimon and AddAll  (books).  Always seek sites where vendors are competing for your order…on Pricewatch in particular, vendors monitor the site and actively try to underbid each other to stay at the top of the list.

4) Search for used items.  This one seems fairly obvious, but it is worth a mention.  Whenever you’re buying something, check Half.com or the MarketPlace sellers on Amazon.com for better deals on used versions of the things you’re going to buy.  This is also a place where small vendors and individuals bid competitively, and they do offer new products alongside the used ones as well.

The bottom line is that all of these tactics are valuable.  Just as thinking about how long you’ll need to work to pay for a purchase can be an effective way to curb overspending, thinking about how long you’d need to work to save as much as you just did can provide motivation for you to seek the best prices by all means possible on the things that you need or things that will truly enhance your life.