Many people today have found the ‘old school’ way of doing investing. That is to be certain that their hard earned money is going to be there for them in the future and that long term goals are met. During these recessionary times, you have to educate yourself to the best possibilities.

If you have a simple savings account, you check many banks, online or off, to see which one is offering the best interest rates.Before you make your decision to change banks, be sure you understand the rules the bank has. Although a higher interest rate may look attractive, you may have to leave the funds there for a certain period of time or keep a high balance. Think it through before you leap.

Commonly speaking, when investing in certificates of deposit, the longer term you are willing to leave your investment and the larger the amount invested, the higher the interest rate you will earn. That’s because the bank wants to make use of your funds to lend to others. That’s how the procedure works. The longer you decide to let them make use of your money the more money they can make. In order to convince you to leave your funds invested longer they will decide to give you more in interest.

Usually, it is a fact that if you want to withdraw your funds early, you will lose a large amount of interest or may incur a penalty. Many seniors like safe investments such as C.D.’s since they are FDIC insured up to a certain amount. Remember that a high rate is only one element. There are other factors you will need to consider before opening an account. Here is a list of some things you need to be on the lookout for:

1. Make sure you always read and understand what it says in the small print. Many individuals put their faith in large institutions not thinking that the bank has it’s own interests at heart. You need to review the platform person (who helps you open your account) all the details such as interest, how to access your cash, fee’s, etc.

2. How much money will you need to open an account, or buy a CD? Some institutions offer more choices than others. Not everyone has an extra $100,000 sitting around to invest, and not everyone wants their funds tied up in a CD for 10 years. These are things you need to know ahead of time, and don’t just take someones word for it, get it in writing.

3. Don’t make the faux pas of just going with whatever bank has the highest interest rate. Remember, the interest rate is important but there are other factors that you will have to take into consideration before you open an account or invest.

One of the services available to you to find interest rates is a service like Bankrate.Com. Be sure to only use interest rate information as your starting point. Once you’ve decided to look into different banks, you need to make a list of all the questions you want to ask at each bank. Do not let them intimidate you into purchasing or opening an account, c.D., or whatever investment you choose at that moment. Remember, you are gathering the facts before deciding. Many people don’t realize that the bank employees earn incentives for the accounts they open.

What method will you use to get the best interest rate?

For the most part, we the people of the U.S. Are spenders, not savers. Now that is giving us a bite. The economic downturn has really given us a ride for the money we are used to spending. We need to re-focus on savings and one way is with a money market account.

A money market account is almost like a regular savings account, however, there are checks that come with it. Usually, you will receive more interest than that of a traditional savings account. With a money market savings account, you are restricted to how many withdrawals per month you can make without being penalized. You also must keep a certain balance. If the balance falls below that amount, you will be charged a fee. Be sure to check the details before opening.

Having understood that, there are certain important differences concerning a money market account and a ‘regular’ savings account. As stated earlier, most money markets will require higher balances than traditional savings and can be as much as $2,500. You will earn higher interest. So, you need to have those funds available to stay there for awhile. Many banks will require a time frame for you to leave open. If you close earlier than agreed (let’s say 6 months) you will incur a penalty.

An additional difference is the smooth of access to your funds. Usually, traditional savings accounts will allow you more freedom to your money. Many money market accounts only allow 3 withdrawals per month. The difference is you can write checks from this account.

Remember that the new rules for FDIC have changed and you must be aware of them & how much is insured with each account holder. If you open with a credit union, you will be insured by NCUA.

Prior to you opening your account, be sure you read in the brochure all the details of your money market account. Look for:

1. What is the interest rate?

2. How does the bank calculate interest?

3. Are there minimum balances to maintain & for how long must you keep account opened?

4. How much will you pay to withdraw your money?

Just because our economy is in a turmoil, don’t let it get you into a turmoil as well. Remember one of the rules in finances is to pay yourself first. This should be a monthly bill just like all the other monthly bills you have.

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