The pandemic caused many to panic save and put money into their banks with complete disregard for the interest they would receive on their money. As far as the public were concerned, storing money was of more importance than earning on it, however, there was a huge opportunity missed here. Digitisation has led to many savings strategies being developed, but the vast majority of the public has not taken advantage of these.
Ben McLaughlin is the Head of US Marketing and President at SaveBetter. His industry expertise spans both the wealth management and consumer banking space, and with 20 years of experience at companies ranging from a fintech start up to a Fortune 500, he is well placed to discuss how US citizens have missed out on savings opportunities. However, not all is lost, as McLaughlin argues people could earn 100% more through a fintech savings account:
Today’s banking experience is much different than it used to be. In-person banking has become less relevant as we, as consumers, can access almost everything we need online, changing and progressing how we interact with our finances. There is now a strong emphasis on creating an accessible online banking experience that is reliable and personal so that users can bank from anywhere, whether it is a simple money transfer or access to essential documents online.
Over the past year-plus, the covid-19 pandemic ushered dramatic changes to our day-to-day life and the financial world. Due to this uncertainty, many have changed their financial behaviour. In fact, so many Americans were desperate to simply “stuff their money away” that they’ve ignored one of the most important factors when it comes to saving – how much interest your money can earn at a bank or financial institution and at what risk.
The pivot to an almost entirely digital banking experience has led to a new realm of possibilities in how consumers can approach their savings strategy at any point of their lives.
More choice in where you bank
Technology has reduced our dependency to secure our finances at the nearest branch for easy access and monitoring, and the fintech evolution has paved a path for savers to find the perfect accounts.
The internet has made it incredibly easy to research what account will service your savings plan effectively. For example, an account from a small bank across the country may offer the perfect growth percentage and be the best fit for your upcoming first home’s down payment, family vacation, or almost any other event in which you’re saving. Online banking offers savers independence and control from the first deposit to the final withdrawal. This option gives savers the ability to customise their plans, organise money, keep track of their growth, and adjust as needed. Additionally, with the rise of free digital budgeting tools, savers can know precisely where their money is going by inputting details about their spending habits. This ensures that they can see exactly how to reduce or reallocate their spending for more strategic deposits into their savings account. The best part of it all? These accounts and tools can be easily accessed from the palm of your hand and are often free.
Finding the right place to put your savings
While high yield savings accounts are an excellent choice, you want to make sure that you choose the bank you like. There are financial institutions that offer high yields due to their innovative banking operations. For instance, neobanks offer high yield saving accounts because they have no physical locations and a lower cost of operations — per account — versus traditional financial institutions. Banks and financial institutions with smaller scale and a mission to bolster local economies, such as CDFIs (community development financial institutions) and MDIs (minority depository institutions), may offer attractive interest rates on deposit products in order to help raise funds to then deploy in support of their local communities. When savers hold their money in these institutions, there’s the added benefit of it having a positive social impact.
What to look for when choosing a saving strategy
Getting a good and safe return on your money is not as easy as it used to be. Today, many banks offer savings accounts with sub 1% saving rates. In most cases, you can expect to only get less than 0.1% a year on your money. Such low savings rates can discourage people from saving. But the fact is, post-pandemic savings doesn’t have to mean earning pennies on a lifetime of savings. There are actually several financial institutions that offer high-yield savings rates, but they may be hard to find or don’t have a convenient way to access them yet. In some cases, these banks can provide savings with rates 30 or 40 times higher than competitors.
An expert solution to finding the best saving account for you
Let’s face it, most people are not experts when it comes to finding the right saving accounts that offer a balance of high-yield interest returns or fit with their selection criteria. Innovative fintech companies like SaveBetter allow clients to select products from a curated network of banks that are all FDIC protected up to $250,000.
Not only that, SaveBetter offers a personal experience that gives you peace of mind and offers you the services that you need online. There is no need to deal with lines at the bank or with any bank individually. SaveBetter is not only a better way to save money, it can also be a way to save time as you only need to sign up once to have the experience of depositing money at different banks through the convenience of a single account.
The impact that a high-interest yield can have on your wealth
The fact is a high interest-yielding savings account can have a strong effect on your wealth. For example, let’s look at two different savings accounts. Both accounts have $100,000 in total. However, the first is a traditional savings account that earns 0.01% per year, while the second account earns 1% per year. In one year, the first bank account will earn $10 in interest while the second account earns $1,000. This is a $990 difference in the first year alone.
Over time, the power of compounding these returns makes an incredible impact. By year five, the first account will have earned $50.01, while the second account will have earned $5,101.01. In ten years, the first account will have returned $100.05, while the second account has returned $10,462.21. As you can see, high yield savings accounts are a game-changer when it comes to retirement planning.
Start saving the smart way
If you are looking for a smart savings strategy, it is time to investigate options like SaveBetter that provide convenient access to deposit products from a variety of banks. This is an opportunity to realise your financial goals through the simple act of saving your money with the right financial institutions.