23 May 2007 No Comment Print This Post  Email This Post

Thats right, your bank is robbing you. If you have money in the bank, you are losing money! When most people think of saving, especially younger people like myself, we think of spending less and putting away money in the bank. Thats a good start, but you shouldn’t put your money in the bank. If you have your money in a normal savings account, your interest rate is something ridiculous like 1% or even less. If you keep your money in a checking account thats even worse.

If you’re earning less than 3%, you are actually losing money. Why? Because inflation is running at around 3% a year. Meaning $1 today is worth 3% less next year. Why do I say that the bank is robbing you? Simply because they pay you itty bitty interest and go around and loan your money out for 7-15% interest and pocketing the difference. You should be letting that money work for you.

You don’t have to be a savvy investor to make more return on your money. The best bet is to sign up for an e-savings account through banks such as ING or HSBC Direct. Its as simple as a regular bank account and it links up to it so you can move money back and forth. I moved all of my money over to an HSBC account which is paying 5.05% interest. I have about $600 in my regular bank of america checking account right now just to pay for monthly expenses. I never keep more than what I plan to spend each month in there. Every extra dollar I leave in there is money lost.

I know some of you may have already heard of ING and such but you haven’t gotten around to opening an account. Some of you may feel that theres no point because you don’t have much money in the bank at this time. You need to get into the habit of thinking return on investment. Every dollar you have should be earning you more money even if its $10. Your future self will thank you for it if you think that way.