By Kayode Olawuyi
Many depositors do not know that they need to do certain things before choosing where to put their money. Most people are just excited to keep their money in a bank without considering choosing the best institution where their deposit could earn the best possible interest rate. Here are five tips to help you get the best compensation for your savings.
1. Conduct a research:
Don’t just open an account with any bank because your friend or relation works there. You should rather try to protect your own interest; where you can get the maximum benefit.
The first thing to do therefore, is to conduct a research of all the banks in your country, their products and services especially savings account and the interest rate they offer. You
don’t necessarily have to operate a savings account where your current account is based. You should consider the amount of money you want to save and the best possible interest you could get there from.
2. Decide on the amount:
You need to make some decisions as to the specific amount you want to save and the access you hope to have to the account. This will help you to choose the type of savings
account and the bank. You need to ask yourself these questions: do I want to deposit a huge amount of money for a long time to earn steady interest? Or do I want to drop some
cash and keep adding to it regularly? For the former, it is called fixed deposit account. Your access to the account is restricted until the expiration of the term,but if you need to do
something with the account, you are penalized. That is why you need to find out the terms. For the latter, you will have access to your money as much as you want, but the interest is not competitive as the former.
3. Study carefully the terms:
Many people lose money on their accounts because they choose to ignore the terms and conditions governing such accounts. This is because they don’t study the terms. You
should read all the rules and other terms governing the account you want to open whether current or savings. For example, a common rule on fixed deposit is that you cannot touch
your money until it matures. If you violate it, you are penalized and you loose some money. Ask for clarification on any clause or you consult your financial advisor or attorney.
4. Seek information:
After a careful study of the terms, note some points you do not well understand or those that are commercial. Seek further information particularly on the rate to be paid should
you decide to make their bank a home for your cash. More importantly, you should seek to know whether the rate being offered on your preferred account may change. Whether fixed or variable, always check other banks to see if they offer better rates.
5. Check your statements regularly:
A lot of people just deposit their money in the bank and go to sleep.
No you have to constantly check your account to see whether the rate has changed or not.
Ask to see your statement of account regularly whether on paper or online to see whether there are some funny deductions. If they can’t give satisfactory answers to your questions,you may consider another bank.
6. Check inflation rate:
The ability of your savings to earn interest is free to the inflation rate. You could in-fact be losing money if the rate of interest your account is earning is less than the rate of inflation. That way, you could consider moving your money.
7. Spread your money:
Don’t put all your eggs in one basket. It is dangerous. If you put all your money (or all your accounts) in one bank and it crashes or it suffers great stress, what happens to your life
savings or fortunes? It is better to put your money in different accounts and banks to reduce your exposure to risk.