Heya everyone. I don't know how many of you out there have savings accounts for you children or yourselves. I do know that interest rates on savings accounts are UNGODLY low. Many banks have switched the minimum balance for 18 month CDs (the most commonly sought after ones by everday people) to $500 minimum deposits. Then you can't touch that money for 18 months and you get around 3.5% at the moment (on average).
What I want to suggest to anyone willing to take a few minutes out of their day to set this up is to SWITCH to PAYPAL. Many savings accounts charge a monthly fee to those who are over 18 years of age if the savings account doesn't have X amount of dollars in it.
Paypal is offering 3.50% interest on amounts put into the account as long as you want to be a part of the Money Market fund. That is huge compared to the mesely percentages a savings account offers. I showed my dad and he popped $700 in immediately (his money he uses for X-Mas) to gain interest. Then, just before he wants to go shopping all he has to do is withdrawl funds and it'll send everything back to his bank and/or savings account. Plus, just because you have a zero balance in your Paypal account doesn't mean it gets shut off! It can stay $0 forever!
I myself am taking $10 out of every check and putting it into Paypal. It's not much and I'll only get a few cents a month interest, but those few cents are a huge jump over what a savings account would have provided me. ~$80 will get you $0.15/month for a total of $1.80 a year. It doesn't seem like much but savings accounts are much much worse.
If you could manage $5/week ($20/month that is) then in 12 months you'd have $240 in your Paypal. Not only is that a good chunk of change for whatever but you're getting some decent cash on it instead of letting it rot in a useless savings account.
The only downside is that you have to wait 3 or 4 days to get the money put back into your checking/savings but if you know you want/need it ahead of time then what the heck right??
Oh yeah, and just one more thing then I'll shut up. When I started using the Paypal account to get interest it was at 1.05%. It stayed that way for a longggg time. In the past year I've watched it rocket to 3.50%. It last month it was 3.28% interest and this month it's 3.50%. Whomever is managing this fund knows what they're doing and is making some serious cash. I can only expect interest rates to climb further.
-Jeff
Distributed Hold'em
Sounds interesting. Probably not good for a college fund though..!
We are putting $400 a month into a 529 plan for our son (and daughter coming)
But I'll take a look into it for a regular savings plan.
Rates in the UK for savings are so much better than the US...
Bok
I am not a big fan of Paypal. I just have heard a lot of mixed things about them.
However ING and companies like it offer a better interest rate than most banks do. ING also allows you you to put in money and take it out at any time from a CD. I don't really know much about them, but I have heard good things and I will look into them more when my 7 month CD ends with the bank in a few months.
I am not a big fan of Paypal either but I do have some money with them. The problem with them is that they only give me USD 500.00 that I can receive on my account for a given month without me upgrading to a Premier or Business account. That sucks in my opinion.
As for ING Direct, I am totally all for them. I've got all my savings with them and they are about as great as can be for a bank. Transfers to and fro ING takes just 2-3 business days and there are no limits on the account, except that you cannot overdraw it.
ING Direct is a Netherlands Savings bank and very good for www.use with an excellent reputation and appropriate guarantees. Been around for a while and now in 8 or 9 countries.
I had an account with their parent bank some years ago called a multi currency account which received my salary whilst working abroad and allowed me to take cash with no charges and good interest in whatever local currency I needed and saved me a lot of hassle with the tax man. Nothing illegal mind, just easier.
Like an ol` 8086, slow but serviceable.
One advantage of old age...nobody can tell you how much cake you can eat
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