Non-Traditional Banks Make Your Money Work For You
By Anonymous
As time goes on, savings accounts begin to have less and less value. Making five dollars every year on your life savings just doesn't cut it. Especially on top of the fees, overdraft charges, and the privilege of high interest credit cards that tie directly into your checking account. Unless you have picture perfect credit, loans can quickly become a burden, in addition to the debt that just keeps piling higher every week.
How do the "successful" pull it off? After all they couldn't have started with more than in their bank account than the rest of the "average Joe's". If you look carefully, you will find that they have two traits: they waste no effort, and they never stop working. Even when it comes to saving, they never stop working at saving what they can, and they make every dollar they have work for them.
Getting your money to work for you is something that can be done right away with zero disposable income. Actually the idea of zero disposable income is a fallacy unless you save every penny, but even then there are plenty of ways to make your money work for you.
The best way is to move away from the more traditional methods of money management like brick and mortar banks. Traditional banks with their myriad fees are not designed to give you control of their money, their focus first and foremost is survival, just like any other business. Non-traditional money management companies like ING have the same focus, however they operate on a different level.
The main reason is two-fold. They do not have to rely on fees to pay rent and large numbers of employees (low-overhead), and they structure their organization in a way that removes the liabilities that banks have. These companies operate entirely off of the web, allowing online transactions, similar web features to the more popular banks, and allowing their clients to have access twenty four hours a day.
All of these benefits are because of the functionality of the internet, but there is an added dimension. Because they do not have to pay for rent, armored cars, tellers, deposit slips, utilities, etc., they have a much higher profit margin than banks. They take this benefit and extend it as an added incentive to their clients. Rather than giving low interest rates (like .05% APR), they are able to give higher interest rates for holding your money (4.56% APR).
They also structure the way they operate to limit their own liability while still extending similar benefits to some "special" bank account types. Standard for many of these companies are no fees and no minimums. Rather than letting you rack up overage fees, they require you to wait until your funds have cleared to access the money. By doing this, they limit the need for fees that some banks charge for opening high-yield checking and savings accounts.
That doesn't mean that they are a panacea for your finances, but they do provide a great opportunity. The best way to turn this to your benefit is to use these accounts similar to the way you would use a standard savings account. For as often as possible, keep the majority of your money in these high-yield accounts, allowing the interest to accrue.
This means that even money you are going to spend will be helping you gain interest. Over time, with a higher average in those accounts, you will gain a higher interest rate. At that point, you can start using the interest that is accruing to move towards even higher yielding investments.
By using your money in this way, you are making it work for you. You are creating opportunities while maximizing the effectiveness of your savings. Now if you could just win the lotto....
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