BestSavingsRates

Best Fixed Rate Savings Account

The best fixed rate savings account depends on your needs. If you need instant access to your money, or the best liquidity possible, you may have to compromise and take a lower return on your savings account. Though, there is no fixed rate savings account, per say, as in a savings account you open at a bank or credit union. Instead, there are various savings account like vehicles that will offer you the best fixed rate on your money.

Consider Liquidity

The best fixed rate savings account in terms of liquidity is the traditional savings account you open with almost any bank or credit union. While it may not offer the most appealing rate, nor is it fixed, there are a few things to keep in mind. While you may not earn 12% or even 5% rate on your savings, you will probably not see big spikes in the rate from month to month.

This is because the return on your money is largely determined by the Federal Bank, which provides money to the banks. The Federal Reserve Chair determines interest rates, and usually will raise or lower them incrementally, so not to send shock waves through our economic system. Even the best fixed rate savings account will be governed by this.

When a bank lends out money, they take your money from your account, and use it for those loans. They give you a percent of their return on their loan. And, that is how you are paid. You are taxed on the money, probably can find a better return on your money elsewhere. But, there are generally no penalties or fees for pulling your money out of the bank. Though, do always be aware and familiarize yourself with your bank fees.

Period of Investing

In other means of finding the best fixed rate savings account, you may have to keep your money with your bank or investment institution for a pre-determined amount of time. Otherwise, you will not get the best fixed rate savings return. And, you may end up owing money in the form of early withdrawal penalties and fees.

When you invest in the best fixed rate savings account your bank has to offer, it may be a Certificate of Deposit instead. These are longer term investments, and require a commitment from you that you will not take out your money early, before they expire. Otherwise, you pay penalties and fees. This is because, again, the bank relies on your money from Certificates of Deposit, to pay people money for their loans. The best fixed return may come from these investment vehicles. And, the best fixed return may be on the longest term Certificates of Deposit.

They may not be, though, and it pays to shop around online for the terms, conditions and returns on your money. It is possible that you can find a one month all the way to a 60 month CD. These keep your money at least reasonably available if you absolutely need it back before the term is up on it.

There are fees, but they can be nominal compared to the alternative: using a credit card. If you had an emergency and needed to take the money out, it would not be as bad as having to pay 15 to 20% to use a credit card. Meanwhile, you would have money just sitting in a CD that could have been used to pay the emergency for far less money instead. It is up to you what is the best fixed rate savings account.

Alternatives to the Bank

In addition, you may even step outside of the bank or credit union for the best fixed rate savings account. Instead, you may turn to the U.S. Treasury for I Bonds, Series EE Bonds, or a Treasury Bill. The Series EE Bond is sold to you for half of its face value. When it has matured, you cash in at the face value of the EE Bond. The I bond is also a popular choice because it is going to pay higher returns when inflation is higher. When inflation dips down, it pays less.

Tax Free

The Treasury Bill, or T-Bill pays lower returns, but it is for 90 days, and you do not pay any state income tax on them. This could save you a huge percent, say 5%, if that is your income tax rate on investment returns. This is why it is called a zero coupon bond, also. This may be the best fixed rate savings account for you instead of traditional banking.

The best fixed rate savings account may not be regular, traditional accounts at all. And, that is ok. It is important to know your needs best, and to understand the qualities of each investment vehicle instead.