Canadian Finance Blog

Tips For Growing Your High Interest Savings Account

Posted: 01 Oct 2011 02:00 AM PDT

Do you have or are considering opening up a high interest savings account? High interest accounts are a great addition to your financial portfolio and allow you to earn money while saving. To make sure you get the most out of your account, here are some key tips to follow :

Find the Highest Interest Rate You Can Get

If you are placing your hard earned savings into a savings account that doesn't give you the highest interest rate you can get, you are leaving money on the table and not giving your savings account the best chance it has to grow. Over the course of time, even small increases in the interest rate you receive can have a large impact on the amount your account will grow to.

With the Internet, it is easy to research and find the best interest rate for high interest savings. Online banks are typically able to offer higher interest rates because they have less overhead, but with a simple click of your mouse, you can peruse many banks to find out their minimum opening requirements and interest rates are as well and schedule of fees.

Try to find banks that offer savings accounts that compound the interest daily. Most banks only compound interest on a quarterly basis, so look around for a daily compounding bank.

Start Saving While You Are Young

The power of compound should be used to your advantage. The longer period of time you can save, the more powerful the compounding will be. If you can start saving while you are young, you can save large sums with relatively small deposits.

Make Regular Deposits Into Your Account

It is wonderful if you have a large amount of money to place into your savings right away, but that is not an option for most people. Saving money can seem difficult, but if you make small, regular deposits, it is easier to save than you think.

The best way to make regular deposits is to set up automatic withdrawals from your checking account and have the money sent to your savings account every month or on a weekly basis if you prefer.

Start with an amount you can handle, whether its $10 a week or $50 or $100 per month. You can always increase the amount later as you make more money. The key is be faithful to your savings plan and not to deviate from it.

Do Not Withdraw Money Out Of Your Savings Account

A savings account is meant to be left alone to grow. Resist temptation to treat your savings account like a checking account. After you put money in the savings account, do everything you can to not take the money out. One way to leave the money alone is to make a list of emergency situations that would warrant taking money out of the savings account. If a situation doesn't appear on that list, then don't take the money out of the savings account.

Avoid Paying Banking Fees

Be sure to always read and understand the terms and conditions of the account you choose to watch out for hidden fees. Some banks offer high rates of interest, but watch out for high fees that are imposed if your balance drops below a certain minimum level. Some banks may charge fees if you want paper statements or using other bank's ATMs. Many banks charge maintenance fees every month. Be sure to avid fees that exceed what you make in interest.

Set a Budget and Stay Focused on Savings

Saving money and sticking to a budget go hand-in-hand. If you stay within your budget, it is easier to save money as planned. There are many websites and software tools that can help you set up a budget and save.

Many money experts recommend that you try to save ten percent of your income on a regular basis. Even if you can't save ten percent, pick an amount you can respect and stick with it.

Even small amounts saved regularly can add up to large sums over a period of years. Speak with a financial advisor or your bank manager about the best option for your personal situation.

Tips For Growing Your High Interest Savings Account originally appeared on Canadian Finance Blog on October 1, 2011.