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5% High Interest Savings Accounts. Think Of The Time I Save.

Today’s post is an exploration and deep dive into 5% high interest savings accounts.  We’re going to talk about some non-traditional accounts you can pursue, that will put your money to very good use long term.  

Remember how important it is to Be Prepared?  Now that you have a solid emergency fund in place you can start to think about the most advantaged places to put that money.

Back when I published one of my earlier posts about Ally Bank (Get Out And Stay Out.  Go The Way Of Online Banking.) we started to explore online banks that can offer amazing high interest rates compared to the old brick & mortar institutions.  When I signed up for my Ally Bank savings account back in January I was receiving a strong 1.6% interest rate return on my money.  Because of the way the Federal Reserve has been cutting interest rates all year, that same account is now receiving a 0.60% rate, but that’s still miles above the 0.01% I was receiving with Chase Bank.

In looking at 5% high interest savings accounts today, I did want to make clear- it’s not an either / or situation!

Personally, I have a number of these 5% high interest savings accounts in addition to my Ally Bank checking and savings accounts (and a whole number of online savings accounts!).  I use a lot of these accounts for a variety of different ways in saving money.  My Ally savings account tends to be where I keep savings monies that should be reasonable accessible, whereas my 5% accounts are where I am stashing and building my emergency fund.

Why?  Because I’m Broadway Joe, and this is Creative Finance.  This is a system that works well for me!  It helps me to separate my money, to visually see it in different places.  This means I can’t touch it as easily as I might want to.  I don’t feel the pressure to move things around.

These systems take a little bit of work to implement- but take a look, and consider if these accounts may be right for you too.

Now Netspend / Later Interest / Save More

Very similar to our favorite credit union DCU (6.17% on the first $1,000 in the account!), there are various accounts out there in the world that will offer you 5% interest on the money you keep in those accounts.

Welcome to Netspend.

Netspend is the first place we’re going to stop by in setting up our 5% high interest savings accounts.

Opening up a 5% high interest savings account with Netspend is a bit of a strange process, because in order to gain access to their 5% savings account you need to open a “prepaid debit card” with them.

Huh?  That sounds like some shady business.

Stick with me!  Reminder dear reader, I have already done this.  It’s real, and it really works if you’re willing to put in the short amount of time setting it up.  The process involves signing up for this card, and then putting it away forever while enjoying access to their 5% high interest savings account.  Netspend is FDIC insured, just like any other normal banking institution.

1. First things first, you will want to have an online checking account with a bank like Ally.  It’s going to make the whole process immensely easy.

2. You will go through the normal process of setting up this prepaid debit card.  I’ll drop a referral link here you can use to sign up.  Full disclosure, if you decide to do this with my link- you’ll receive a $20 credit once you make your first deposit of $40 or more, and I’ll receive a $20 credit.

And guess what?  After you’ve signed up, you can go ahead and refer a friend, family, or household member and snag yourself a $20 credit.  And so on, and so on.  It’s a win-win-win, let’s keep going.

3.Once you sign up for this debit card, you’re going to patiently wait for it to arrive in the mail.  It will arrive in the mail with a package of information (like any new account would), including your debit card account and routing number.  Keep this information– write it down somewhere, file the paperwork, etc. however you personally store this kind of info.  You will need it to link your online checking account with the card.  Go ahead and activate the card, and then put it away in a drawer somewhere!  You’ll never need to look at it again.

  • Note #1: Choose the “Pay-As-You-Go” plan.  We’re not worried about usage fees, and will explain why shortly.
  • Note #2: Do NOT try to link the Netspend account to your bank before you’ve received and activated the card.  The bank will likely deny the transaction. 

4. Link your online checking account with your new Netspend account.  Your bank will probably send some micro-deposits to your Netspend account for verification, that process may take a day or two for those micro-deposits to clear.  Go ahead and verify them after they do.

-5.

5. Now you are finally able to transfer money from your online checking account to your Netspend account!  Go ahead and do so.  Since we get 5% interest on the first $1,000 in this account, I recommend you aim to “max out” that account to $1,000.

6. Now that you have moved money to the Netspend account, you should have access to open the 5% high interest savings account.  You can find Move Money in the sidebar, and then click Savings Transfer.  This will give you the option to open your savings account.

Now make sure to transfer the money that is sitting on your Netspend debit card to the savings account, and viola!  You’re getting that sweet 5% rate on your money, well done!

7. The last step to take here is setting up a simple transfer from your online checking account of $1 every 2 months.  This is simply to avoid the Netspend “inactivity fee”.  Netspend will charge you this fee if there’s no activity in your account for 90 days.

You can set up an automatic transfer from your online checking account to Netspend every 2 months (roughly 60 days) of $1 to avoid this fee completely.  And then every couple of months or so feel free to transfer those extra dollars back to your main account.

Finale Thoughts

So if you feel like you have a good grasp on what’s happening here I have good news for you.  There are other accounts that operate in the exact same way, and can be set up with the exact same process!

You’ll need a different username for each account as they’re all a part of the Netspend family tree.

And then you’ll have five 5% high interest savings accounts each generating good interest on $1,000 for you.  A total of $5,000 generated 5% interest annually- that’s $250 per year for doing nothing more than this set up work.

To some of you this all might seem like so much work for so little reward.  It is a bit of work, but I promise you it’s a whole lot of reward.

Remember we expect annual inflation to be about 2-3%.  By leaving your money in any account that generates less than that in interest, your money is depreciating in theory.

It’s vital to have a healthy emergency fund on hand.  So why not let that emergency fund work hard for you at the same time?

What could you do with an extra $250 per year?  Would you take a little vacation?  Enjoy a nice mail?  Maybe invest extra?  It doesn’t really matter at the end of the day- but the nice thing is, you’ll have options

And there are more accounts out there just like these.  We’ll get there.  When I think about why this is worth doing, I think about the money I’ll save.  I think about the little bit less of work I’ll have to do.  I Think Of The Time I Save.


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