Squeeze More Return From Your Savings


So you are saving money? Great. But where do you stash it for great rewards?

Getting a decent yield on savings is a challenge today. Regular savings accounts and certificates of deposit (CD) pay paltry interest—almost zero in some cases. U.S. Treasury bonds are barely better.

Experts predict low interest rates for a year ahead. Before raising rates, the Federal Reserve will watch for inflation, heightened economic activity, increased lending, and improved outlook for U.S. jobs. While it’s likely interest rates will stay low through 2011, keep an eye out.

In the meantime, savers have a few options:

• Pay off credit cards. Not paying 16-19 percent interest—no matter what your balance—means big savings.

• Refinance homes to a 15-year mortgage. Even with mortgage rates of 5 percent, homeowners can pay substantially less over the lifetime of the loan by shortening the term.

• Discover “high yield” checking. Some banks/credit unions offer a checking account with 3-4 percent interest if you can meet the requirements (usually making 12 or more signature debits per cycle, getting statements electronically, using auto-pay or direct deposit).

• Assess risk and asset allocation. With bigger rewards comes greater risk. Can you afford to put savings into stock investments that pay dividends?