The pandemic has shown the importance of having emergency funding to help you overcome unemployment. Pandemics, on the other hand, have made savings difficult as deposit rates have fallen to record lows.
Deposit rates are likely to remain low in 2021, but they will not hinder savings. Here are four smart savings strategies for the new year.
1. Create a savings plan
Creating a savings plan is the first step in building an emergency fund. Start by determining the amount you need. At the very least, your savings should be able to cover your living expenses for 3 to 6 months.
Once you have decided on the right amount to save, include regular donations to emergency funds as part of your monthly budget. Keep track of your progress and deal with savings as important as paying your bills.
2. Find a checking account with auto-save
New mobile and online banks have introduced checking and savings accounts with features that help protect your savings plans. One such feature is automatic forwarding. When you receive a direct deposit of salary, automatic remittance automatically transfers a percentage of the direct deposit to your savings account.
Another saving feature is rounding up. With the round-up feature, each time you make a purchase with a checking debit card, the bank rounds up the purchase to the nearest dollar and transfers the round-up amount from your checking account to your savings account.
These savings features are becoming more common, especially in new financial technology companies, also known as fintech. Varo and Chime are two examples of well-known FinTech that offer these savings features along with notable checking and savings accounts.
3. Find checking and savings accounts to help you earn more
Once you’ve saved the regular portion of your budget, look for a bank that will help you earn more with higher deposit rates and cash back on your debit card purchases. Hundreds of community banks and credit unions across the country offer Kasasa brand checking and savings accounts. These Kasasa checking accounts are checking accounts that offer great rewards when actively used.
Two popular reward checking accounts under the Kasasa brand are Kasasa Cash and Kasasa Cash Back. Casasa Cash offers high interest rates up to a certain maximum balance. Instead of interest, Kasasa CashBack pays cashback for debit card purchases.
One of these Kasasa checking accounts can be paired with a Kasasa Saver savings account. In this way, interest or cashback rewards earned on your checking account will be automatically transferred to your Kasasa Saver account each month. In addition, your Saver account balances will have high interest rates.
As you can imagine, the benefits of these Kasasa accounts come with a catch. To earn high interest rates or cashback rewards, you must meet your monthly activity requirements. This is often just the most performed activity in a major checking account. Regular monthly requirements include the purchase of 10 to 20 debit cards, at least one direct deposit or automatic payment, and receipt of an electronic statement.
4. Avoid checking accounts with excessive fees
You don’t want your money to be reduced by bank charges because you are accumulating your savings. Checking accounts are often worthless due to account fees. Especially in today’s low interest rate environment, we are not close to offsetting fees such as monthly service charges, ATM fees and overdraft fees.
However, not all checking accounts that pay interest are charged. For example, at Kasasa, you can receive high interest rates on your checking account and you don’t have to worry about fees. There is no monthly service charge for all Kasasa accounts and no ATM usage fees at other banks. Also, if you meet the monthly requirements, many Kasasa accounts will reimburse the fees charged by other banks for using ATMs.
You can also avoid the checking account fees of some online banks. For example, Ally Bank Interest Checking has no monthly service charge and Ally does not charge a fee for using ATMs at other banks. You can completely avoid these charges by using ATMs on the Allpoint network, but Ally will refund up to $ 10 at the end of each statement cycle, which other banks charge to use ATMs. You can dodge overdraft charges by setting up Ally’s overdraft forwarding service. This service provides automatic and free transfer from your savings account to your check to cover overdrafts that occur in your checking account.
Other things to keep in mind to save more in 2021
As recommended above, it is important to start savings in 2021 and make sure that your checking and savings accounts have features that will help you succeed in your savings plan. Please note that you may not be able to find all the features in one bank. Therefore, focus on choosing the account that has the most important features to achieve your savings plan.
Ken Tumin is the founder and editor of. DepositAccounts.comHas been tracking and evaluating the offerings of bank and credit union savings, CDs and checking accounts for over a decade.
4 smart savings strategies for 2021 that you can start right now
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