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banking

Money Markets versus Savings Accounts

It’s typical for people to want to invest their money or just save it; sometimes investing in CDs and Bonds seems a little scary and savings accounts may seem like the safe way to go. If you just want to start a savings account and have a chunk of money to put away, it’s a good idea to think about interest rates and your options when saving.

Simply Saving

A standard savings account requires little to no minimum balance but the interest rate, depending on the economy, is  typically less than 1%. So even though you’re usually not paying or at least not paying much to invest your money, you’re not making much money in a standard savings account. Financial institutions pay you interest rates to keep your money in their  accounts to they can lend it to other people but mainly, standard savings account rates are so low that the money you‘re putting away is literally just sitting there while the financial institutions are making a higher interest rate lending your money out and meanwhile, giving you a lower interest rate in return. Sounds kind of crazy when you think about it, huh?

Simply Money

Money Markets Accounts (MMAs) are becoming the trendy way to save, especially now when interest rates are at an all-time low. There are a few standard stipulations to MMAs, but the perk can be two to three times the interest rate than a standard savings account. Banks and credit unions are the easiest places to start a MMA account and the minimum, depending on the interest rate, is usually around $1,000. The higher the minimum, the higher the interest rate – so if you’re minimum account balance is $2,500, you’re interest rate, depending on the bank and economy can be as high as 3%. It really depends on how much money you’re willing to put away and not have access to. If you think about it, it’s an even better way to save than a savings account because you can take as much money out of a standard savings; an MMA discourages you from being able to drain your account for an impulse purchase because you have to keep that minimum balance.

For example: If you have $7,000 you do not want to spend and $3,000 of it you’re adamant about not touching for a long period of time, than find a bank that has a minimum of $3,000 and deposit your entire savings. This way, you’re making  interest on all of your money at a much higher rate with a minimum deposit you have no intention of touching in the first place. Additionally, the restrictions and higher minimum on MMAs discourage your from making regular transactions on your account like you would do with a typical checking account.

How is this possible?

MMAs are slightly different than a standard savings where banks and credit unions are lending money to approved borrowers. An MMA is money that is invested in government and corporate markets, which means as a MMA investor, you’re getting paid the current interest rate in the money market and not from current bank interest rates. Being able to invest money with higher rates has a slight downfall because banks have to restrict how much money is being taken out of the market. Financial institutions can sneak around the legal restrictions of these accounts by structuring it like a savings (so you get interest)  instead of a checking (where you get low to no interest). Because of these restrictions, money markets are structure like savings account regulations – with withdrawal limits (usually 6) and total transaction restrictions per month.

Where to go to find a Money Markets or Savings Account

Many times and depending on the financial institution, MMA and savings accounts have the same or comparable interest rates; in some cases it can be just as profitable to put your money in a standard savings. But for the most part, a MMA will have higher interest rates if you know where to look. Bankrate.com and Consumerismcommentary.com give you current information on which banks and financial institutions are giving the highest rates on MMAs and Savings Accounts. If you’re going to put your money in a bank, do a little research and see what bank will give you “more bang for your buck.” Now that’s money in the bank!

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banking

Simplify You Banking and Financial Needs

If you are a small business owner, chances are you are very busy trying to run a company or companies, balance your family and personal life, and have some time for leisure and relaxation. In order to be able to accomplish all of this without getting overworked and overwhelmed, you must be smart with you approach you finances.

Use Bill Pay: If you are not using online banking tools like bill pay, you are missing a primary opportunity to save time and money. Two basic types of bill pay are available. First, you can pay bills through your business checking or savings account through your bank, or you can pay through your utilities and services providers (i.e. mortgage company, heating, power, & light company).

Usually, these services can be automated, so you do not need to worry about missing your bill payments. This will save you time and will potentially save you money because you do not have to mail in payments. Another advantage of using bill pay is that it cuts late fees because your payments are always on time.

Caution: When using bill pay, make sure that it is working properly during the first couple of months. Also, make sure that your service providers or bank are billing you correctly and are not charging you fees for the billing service.

Consolidate Banking Accounts: Simplify your life by consolidating your bank accounts. Instead of trying to juggle multiple accounts, research and find out which bank or credit union can best meet your needs for your business, investments, and personal banking. This will allow you to take more control of your finances and avoid unnecessary time and money spent that is associated with trying to run accounts with multiple bank.

It is very important that you make an informed decision when selecting a bank for your various needs. Understand the rewards and fees associated with different financial accounts, as there can be a lot of variance in services and charges offered.

Use Remote Deposit: Remote deposit is a service offered by most banks and credit unions for businesses. Once you sign up with the financial institution, you receive a scanner, which allows you to scan customer checks and deposit them into you banking account. This can be done from the convenience of you office or home.

The advantage of this is that you save time, money, and gain convenience, since you can deposit check from your offices or home. Also, since this is all done online, your company will have access to all records online. This will help as you run reports to and answer customer service inquiries about payments. Some financial institutions have developed apps for smartphones like the iphone, which enable you to scan and deposit checks anywhere by simply taking a picture of the check and processing it through smartphone app.

Think Smart by Using the Free Tools Available.

As you look to simplify your schedule and banking related duties, take advantage of the many free tools that are available. The list above is just a sample of numerous opportunities, and it is up to you to explore them, and take action.

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banking

Is It Possible to Have Too Many Bank Accounts?

A good majority of people have several bank accounts which were set up for different reasons and purposes. Typically, consumers have at least one savings account and one checking account if not more. But is it necessary to have more than that when managing your money?

Benefits to Limiting Number of Bank Accounts

While it may seem logical to some people to establish several accounts to handle money for different reasons or to take advantage of higher interest rates, it can be detrimental to keep multiple accounts open. Here are some reasons why:

  • You’ll pay more in fees for maintaining a variety of accounts
  • You increase the risk of becoming the victim of identity theft
  • You have more accounts to monitor on a regular basis
  • You will have more terms and conditions to keep track of and abide by

Analyze Which Accounts Are Unnecessary

Consumers who have bank accounts open with several banks need to take stock of which accounts are in the best interest of their personal financial plans. You should consider consolidating financial accounts that are not used often and have no other benefit to you. Keep only those that remain active or you may face continual fees for inactivity with some banks. Do a comparison search online between several banks to see who is offering the best deal if your current bank is not up to par with your financial needs.

Multiple Accounts is Not Good Accounting

Some will open several accounts as a way to better track and manage money. It can be a wasted effort and incur too many fees to take the place of real accounting measures. While you may want a savings account strictly for savings, one checking account and a good ledger book is all you need to manage your money regardless of where it is coming from or going to.

When Multiple Accounts Make Sense

There are some exceptions for keeping multiple accounts. Some situations may dictate that having several accounts is actually beneficial including:

  • Dependent accounts – when a child has an account held jointly with a parent
  • Special tax incentives – some accounts will offer tax incentives for establishing and maintaining an account for a special purpose such as education, retirement, and health accounts.
  • Savings accounts for CDs – when a saving account is invested in certificates of deposit that have different maturity rates.
  • Small Business accounts – accounts that are opened by a small business owner as a way to separate business from personal finances.

Overall, it is best to limit where you are stashing your regular cash. As banks are constantly working to gain more business, they remain extremely competitive. You can use that to your advantage to get your current bank to up the ante with better incentives or you can find a new financial institution that is more inline with your needs.

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banking

Is Online Banking Safe?

Is online banking safe? In today’s environment of hackers, identity theft, and corporations “losing” confidential data, this is a relevant question to ask. Let’s face it – anytime you use the internet, you are exposing your computer to dangers such as viruses, spyware, trojans and other malware. This article will help you be safe when using online banking and protect your investments.

Minimize your exposure to online banking fraud

Follow these tips and your online banking experience will be safer and more enjoyable:

Keep software and operating systems up to date. Online thieves use automated bots to scan the internet for old software programs and operating systems with known security flaws. Staying up to date keeps your computer from raising red flags in their searches.

Install current anti-spyware and anti-virus software. Anti-virus and anti-spyware programs will save you a lot of trouble and keep your computer and personal information safe from identity thieves.

Use a safe browser. Not only does Internet Explorer suck from a user’s perspective, but it is full of exploits. Switch to FireFox, a free browser, which is safer, faster, and offers more functionality.

Don’t access online banking sites from a public computer. Enough said.

Use secure passwords. Make sure your passwords contain both upper and lowercase letters, numbers, and symbols (if allowed). Also vary your password and user account names.

Be careful with wireless connections. If you know how to secure your wireless connection so it doesn’t broadcast your signal, you can encrypt your transmissions, and otherwise keep prying eyes away from your private information, then go for it. Otherwise, don’t bother.

Beware of phishing e-mails. Phishing e-mails are cleverly disguised e-mails purportedly from your bank. These spoofs try to trick people into going to a false website disguised as the original and inputting their account number and password. To avoid these make sure you only bank on a website that uses secure socket layer technology – the url should look like this:

“https://” plus your bank’s name.

The “s” in the web address means it is secure.

The other thing to look for is the actual location of the web address. Hover your mouse over the link and look at the bottom of your browser – it should show the location the link is pointing to. For example, hover your link over this: High Yield Savings Accounts. You should see “https://highyieldsavingsaccounts.net/” in the bottom of your browser. If a link in your e-mail is trying to send you to a location you don’t trust, don’t click it! It may send you to a site that will attempt to install a virus or trojan on your computer.

Use an online bank with security features. Many online accounts add an additional layer of protection when accessing their site. A common security feature is using a custom picture and PIN – ING Direct, Vanguard, and more recently, WTDirect use this security feature. You can read more about WTDirect adding this feature here: WTDirect adds security features to account login.

Another security feature is using a keyboard PIN pad like TradeKing or the Thrift Savings plan use. Some banks taker their security a step further and provide customers with a SecurID fob, similar to what many corporations use to prevent unauthorized account access.

Protect yourself and your assets

Thieves are lurking around trying to get your money – don’t give them easy access. Protect yourself and your assets, and enjoy the wonders of compound growth with the best high yield savings account rates.