Savings accounts at walk-in national banks such as Bank of America tend to be pretty poor with rates that are far below what you can find elsewhere in the marketplace; Furthermore, the savings accounts offered by these institutions are riddled with fees and rules costing customers money and creating a miniscule net savings.
Don't forget, you also get to pay taxes on that miniscule growth.
Emigrant Direct, the online banking arm of Emigrant Bank in Boston, is offering the Emigrant Direct American Dream Savings Account with a whopping 5.05% APY annual percentage yield. That's a great rate, but it's not the best. As of this writing both ING Direct and E-Trade were offering 5.25% on a savings or money market account; However there are interesting elements to the Emigrant Direct program that make it a worthy contender for some of your savings dollars.
An unique and helpful addition to an American Dream Savings Account with Emigrant Direct is the Emigrant Direct Platinum MasterCard. Every six months, the credit card will deposit up to 1.40%* of your credit card expenditure for that period into your Emigrant Direct American Dream Savings Account.
Savings example: If you apply $4,000/month to Emigrant Direct Platinum MasterCard, after six months you'd have spent ~$24,000 and Emigrant Direct would deposit $336.00 of free money into your American Dream Savings Account.
Please note, this type of financial activity is NOT for everyone. It's important that this account only be used by individuals who intend pay off the statement balance each and every month to avoid interest charges. Do not carry a month-to-month balance with this card. The current interest charges associated with carrying a balance month-to-month are astronomical and these charges would erase any benefit gained from the 1.40% cash-back. The best way to benefit from this card/account combination is to use the Emigrant Direct MasterCard to make your monthly purchases that would normally be debited from your checking account. Then, simply apply those funds from your checking account directly to paying your credit card balance. Also, if you have a large purchase to make and expect to pay cash or check for the item/service, simply apply the cost to the credit card and again, pay the cash or check towards the credit card balance.
At the end of the year, if managed properly, you are getting a great rate for your savings dollars and adding a little free cash to your savings for just simply paying your bills. It won't make you a millionaire, but it will put you on the right track.
*If you maintain a balance less than $10,000 in your savings account, the cash-back percentage is changed to 0.5%
**phatz.com has financial interest in this service.
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