interest

Are High Interest Checking Accounts Worth It?

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high interest checking account

There are a lot of high-interest checking accounts out there these days, but is a high-interest checking account worth it? The answer depends not only on how you use your checking account, but also the details of each account. As is so often the case with personal finance, the devil is in the fine print details. Be sure to understand all of the fine print before rushing off to transfer your checking accounts. Check out my Acorns review. High-Interest Checking Account Qualifications The first thing you want to look at is how to qualify for a high interest checking account. At most banks, getting the highest interest rate on your checking account requires you to make a minimum number of debit card transactions. That is because the bank earns money on each one of those transactions. In a way, with every debit card purchase you make, you earn the money the bank uses to pay you the higher interest. You also are usually required to get a direct deposit into the checking account each month. For many people, the only direct deposit they could get on a monthly basis is their paycheck. The idea is that by requiring a direct …

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Not Cashing Savings Bonds to Avoid Taxes

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taxes on savings bonds

There is a common misconception about avoiding taxes by not cashing savings bonds. While there are no penalties for not cashing mature savings bonds, there is no benefit to holding them for tax purposes, either. Sometimes people wonder, “Do savings bonds expire?” For the most part, I typically assume that people who have misinformation came by it honestly. Usually, they didn’t quite understand fully what they read or were told. After all, one of the trickiest things about achieving financial independence and personal finance is that there are so many exceptions and nuances. In a lot of cases, what is absolutely true for one person is not true for someone else because of their individual circumstances. Tax Consequences of Cashing In Savings Bonds Unfortunately, while the internet has given people easy access to vast amounts of information, it does so without any verification that the information published is true. The problem is compounded by those who read something inaccurate and then repeat it elsewhere. This makes the false information seem more valid because it is corroborated by another source, which, in fact, is just repeating something that was wrong. That is why it is so important to verify financial planning …

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Power of Compound Interest – A Case Study

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compound interest

Over at MarketWatch recently, was an interesting article entitled Make Your Kid Rich for $1 a Day. I’ll let you go over there and read the particulars if you are interested. However, I think that the concept provides a great way to study the phenomenon of compound interest, and the elements that go into it. Compound Interest Only Works Over Long Periods People love to quote Albert Einstein saying that the most powerful force in the universe is compound interest. What most people forget is, that as a physicist, Mr. Einstein was used to working on a very large scale, with a very long timeframe. Let’s start at the beginning. Compound interest is not magical. It is merely the phenomenon of earning interest on your previously earned interest. So, if you invest $10,000 and earn 10 percent interest annually, then you would earn $1,000 in interest, and have $11,000 at the end of the year. (Sort of, depending on how interest is paid and compounded, but let’s not quibble.) The following year, you would also earn the same 10 percent interest. However, this time, you earn 10 percent on $11,000, not just the original $10,000. In other words, you are …

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Is myFICO Worth It?

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wallet

Don’t waste your money on services that allow you to constantly get your credit score. Use a little insder knowledge to get a free credit score and check it only when it makes sense.

Fed Raises Rates – More Coming

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fed raises interest rates march

The Federal Reserve raised interest rates one-quarter of a point, or 0.25%, in a widely expected move. The benchmark rate is now technically the range between 0.75 percent and 1.0 percent, although most people refer to this simply as 0.75%. As pretty much everyone predicted, the Fed raised interest rates at its March meeting. This is the second interest rate hike in just three months, and the third one overall since the Great Recession. Fed Chairwoman Janet Yellen said, “The simple message is, the economy is doing well.” What Happens Next? While some indicators are showing signs of inflation, there is also an increasing concern that the economy isn’t as robust as some might think. Things certainly look good right now, but few analysts look as this economy as a powerful train moving forward, so much as a boat drifting in the right direction and easily pushed off course. As a result, the guidance from the Fed continues to be for three total interest hikes in 2017, meaning that currently they expect two more hikes between now and December. Just when those hikes will come depends a great deal on how the economy fares. Another few months of good job …

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Safely Earn More Interest on Your Money

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I am always a bit curious when I read a cover story headline like the one on Kiplinger Magazine this month. It says 18 Ways To Earn 5% or More On Your Money. A lot of readers will make an assumption that goes along with that headline that they are talking about low-risk investments or no-risk savings products. After all, it doesn’t take a degree in advanced personal finance to know that there are literally thousands of ways to earn 5% or more on your money. Of course, most of those also come with a way to lose 5% or more on your money too. That is not what the article is about. Instead, this particular article, whose article title inside the magazine is, “Great Rates In A Low-Yield World” manages to give a better clue. The article is NOT about where to open a savings account to earn 5% or more. It is about how to get 5% YIELD on your investment. That is, 5+ percent as income, and not counting losses on invested capital. Real Earnings Are About More Than Dividends and Interest Unfortunately, while the article does indeed uncover available investments earning a 5% or higher yield, …

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