Finding money is fun, and even as adults, people still get a kick out finding dollar bills in the street or quarters under a seat cushion. Since these aren't exactly life-changing finds, there are several things people can do to effectively find much more meaningful sums of money.
Here are some everyday ways you could find yourself a little extra money:
1. Switch from savings to CDs
Money sitting for a long time in a savings account is probably missing an opportunity to earn more interest. Certificates of deposit (CDs) typically pay higher rates than savings accounts. While the generally low level of bank rates these days makes it difficult for people to get very excited about those rates, in some ways the low rate environment magnifies the differences between rates on various bank products.
For example, according to recent FDIC figures, 5-year CD rates average 0.78 percent, while savings account rates average 0.06 percent. That seemingly small difference means you would earn more than 13 times as much interest in a 5-year CD than in a savings account.
While it is useful to keep some money readily available, people tend to let more money than they are likely to need in a hurry build up in their savings accounts. If the chance that you will need the money soon is slim, you would be better off risking paying an early-withdrawal penalty in a CD than routinely accepting less interest in a savings account.
2. Pool your money to qualify for jumbo rates
People have a habit of acquiring bank accounts somewhat haphazardly over time - a checking account here, some savings there, perhaps an old CD at another bank. Separating your money can be a mistake if it prevents you from qualifying for jumbo rates. These are special rates given for large accounts, typically $100,000 or more.
However, some banks also give bonuses for new deposits above a certain amounts, and those thresholds are often well below $100,000. These extras may only amount to a few extra basis points, but if you concentrate your deposits you can start earning that extra money month-in and month-out.
3. Shop around for the best bank accounts
Whether it is CDs, savings accounts or other bank products, never forget that banking is a very competitive business, with a wide range of choices. In particular, online banking is making more competitive products available in all areas of the country. Customers tend to be lethargic about switching banks, but actively shopping for rates or accounts with no maintenance charges year after year is another way to find yourself with a little extra money accumulating in your account.
4. Ratchet up your automated savings
Whether it is a direct deposit into a savings account or a deferral into a company 401(k) retirement savings plan, push the amount up by a few more dollars. Chances are, you won't miss that little bit from paycheck to paycheck. But over the course of the year, it can really add to your savings.
5. Work on your credit rating
Bad credit is very costly. It will cause you to pay higher credit card rates and loan rates when you borrow money. Some insurance companies even charge higher auto insurance rates to people with low credit scores, so improving your credit rating can save you money in a variety of different ways.
6. Ask your insurance agent about better rates
Like banking, insurance is a very competitive business, but one where passive clients tend to get taken for granted. Your insurance agent isn't likely to spontaneously offer you a better rate out of the blue, but he might be able to come up with one if faced with losing your business. In particular, if you have been with a company for several years without making a claim, you may well qualify for a better rate.
7. Consider a high-deductible insurance approach
Whether it is auto insurance or health insurance, if you are the type of person who rarely makes an insurance claim, you may be paying too much for your policy if it has a fairly low deductible. High-deductible premiums are much cheaper. Instead of routinely paying extra money to an insurance company, you can start putting those dollars into an emergency savings account just in case you have to pay that higher deductible at some point.
None of these is particularly dramatic, but that is exactly why these fairly ordinary ideas tend to get overlooked. If you take the trouble to attend to these fairly mundane details, it could be like finding money every day.
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