Best Savings Account Interest Rate

There are many different types of savings accounts available. Choosing one that is right for your financial situation is an important part of your future. The biggest consideration is the rate of return on your balance. So we are going to take a look at several types of accounts and their benefits so you can get the best savings account interest rate.

Standard savings accounts

These are the accounts you can open at your local bank. The deposits are made by either through direct deposit manual deposit. The usual interest rate is around 5% or so annually, or per year. Currently as of 10/12 2007, the interest rates are ranging from 4.17% to 5.5% depending on the bank you choose.

Watch the minimum deposit and minimum balance requirements. There may be a minimum balance requirement to even receive the interest return. One bank has a 1$ minimum deposit but you need to hold a balance of $10,000 to receive the interest! This is a safe investment as your cash is secured and the interest is guaranteed but the interest accrues slowly.

Money market accounts

Basically a money market account (MMA) is a high interest savings account. MMA's are available at just about any bank. The cash you keep in an MMA will be invested, but the banking institution manages the investing and thus collects the returned interest.

Your money is usually put into low risk, short term investments like CDs (certificates of deposit), Treasury bills or other safe investment vehicles. The institution rewards you reward for letting them use your money by offering you a premium interest rate that may be significantly higher than a normal passbook account.

As of the writing of this article, the offered rates were between 4.55% and 5.84% A money market account is a decent low risk savings strategy but there are certain restrictions associated with it. Unlike a passbook savings account, a money market account usually has a minimum deposit and minimum balance. Withdrawals can be made but you cannot go below the minimum balance. If you do, there are stiff penalties.

Health savings accounts

An HSA or Health Savings Account is available to people who purchase a high deductible health plan. The money is deposited either on a pre-tax (tax deferred) basis or post tax (after tax) and is to be used for medical purposes. These deposits can be made up to the age of 65. Withdrawals can be made for medical purposes without tax liability.

Basically, this is another way to save for retirement and help with medical expenses along the way that are not covered by medical insurance. This could be dental care, eyeglasses or vision and chiropractic care.

As of 2007 plan years, deposits are limited to $2850 for individuals and $5650 for families. Those over age 55 can add another $800. Since the deposited money may be invested similar to IRA's and 401(k)'s, the interest earned is dependent on the options offered by the HSA plan you choose.

IRA accounts

Individual Retirement Accounts or IRA's are another savings vehicle. The money deposited cannot exceed $4000 per year and can be placed in any number of investments of your choice. This could mean money markets, CD's or other interest bearing instruments. Thereby you can determine the rate of return your cash receives.

A little research is all it takes to choose the highest yielding option. Hope this information will help you to find the best savings account interest rate.