Posts Tagged ‘Saving Account’


How to Double the Interest on Savings

by Ziva Beck in Must Read, Savings

In the past few years, the interest rates on money market and savings accounts have been dismal to say the least. My Vanguard Prime Money Market fund that once provided one of the best yields is currently only paying around 0.06%. The saving rates at the local banks are not much better.

With this in mind, I was on a mission to find the best saving rate. My first stop was checking the best rate comparison online sites like After looking at the rates on these sites, it became obvious that online savings accounts were the way to go. You can find Online Savings accounts or Online Money Market accounts paying around 1%. This was certainly better than the 0.06% in my Vanguard Prime Money Market fund. But it was still not high enough.

Can I do better?

Next, I started looking at available CD rates. The 1 year CDs, 2 year CDs and 5 year CDs. The highest rates of around 2.4% were offered for the 5 year CD. It was higher than the 1% but you had to commit to 5 years. This didn’t look like a good option since at the moment the interest rates are very low and there is an expectation that they will go up in the future.

Further research revealed another possibility that gives you the higher rate of approximately 2.4% without the 5 year commitment. I have learned that Ally bank offers only 60 day interest penalty on their CD products (as per the information on their website That means that you can sign up for a 5 year CD, get 2.39% APY (as of 3/6/11) and have the ability to withdraw your money when interest rates go up with only a small penalty. For example, if you withdraw your money after 1 year, your APY will be 2%, which is still higher than the current 1 year CD annual yields offered around 1.20-1.30%.

Sometimes, you can have your cake and eat it too. Bye, bye Vanguard Money Market. I am now a happy customer of Ally bank.