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Finding the best savings account interest rate is a task that is sometimes a little more involved than people think. The process requires considering the different types of savings accounts offered by different banking institutions, both local and online. In many cases, factors such as the minimum balance that can be maintained in the account will make a difference in the savings account interest rate that is earned. A number of banking institutions also offer floating or variable rates on some savings accounts, an approach that may also be worthy of consideration.
In order to find the best savings account interest rate, the first step is to determine how much of an initial deposit you can afford to make. Doing so allows you to focus your attention on accounts that do not require any more of a minimum balance that you can reasonably provide. Keep in mind that some banks will allow you to open the account with a minimum deposit, and allow a grace period for you to build up to the balance needed to lock in the best possible rate. Be sure to get a clear understanding of what rate applies if you fail to meet that minimum balance within the allotted time, as the resulting rate may be far less than you anticipated.
For people who cannot afford to invest a lump sum into a new savings account, online savings accounts are a good place to begin. A number of brick and mortar banking institutions have online savings accounts that can be opened with a very small sum, and earn a competitive interest rate without any type of minimum requirement. There are also Internet-based banks that provide accounts of this type, often offering rates that are at least as good as their brick and mortar counterparts. While there may be some variance in the savings account interest rate on these no-minimum accounts, look beyond the rate itself and find out how the interest is applied to the balance. This can make it easier to determine if a given rate is truly the best, or only appears to be the best on the surface.
Make it a point to talk with providers about all the different types of savings accounts and types of interest that are part of their product offerings. This will make it easier to understand the difference between savings account simple interest and savings account compound interest, your options in terms of rolling an existing account into one with a higher interest rate in the future, and other important considerations. While the process may take some time, the end result is earning the best possible savings account interest rate that you can expect now, while positioning yourself to take advantage of better offers in the future.