Even the person who feels without money has an opportunity to save a few dollars here and there. By taking small steps in saving, the situation can soon become such that the economy feels much more robust. The old saying “many streams small …” really has relevance in financial issues. If you decide to start saving money, the next step is to make sure you get a return on your savings. How do you do it in the best way? Here are some tips when choosing a savings account.
Risk and return
As you probably know, the riksbank’s repo rate is negative (-0.50% at the time of writing). This means that the major banks do not pay any interest on their deposit accounts. To get interest, that is, return on your savings, you should turn to niche banks or deposit companies.
Niche banks are those who have bank permits and are affiliated with the state deposit guarantee. At these, you can find savings rates of up to 1% on accounts with free withdrawals. Deposit companies are not affiliated with the deposit guarantee and they can thus offer a significantly higher interest rate, sometimes up to 10%. At the same time, the risk in such saving is considerably higher. If the company goes bankrupt, it is not certain that you will get your money out.
If you want to start saving, the recommendation is that you primarily choose one or two niche banks with a deposit guarantee to possibly spice up with a smaller saving with a deposit company.
The interest rate can be counted differently
Your return on savings comes into your account each time the interest rate is “capitalized”. It can happen day by day, once a month or once a year. If you receive the interest every day, you get a higher interest rate on the interest effect, which is clearly advantageous.
If you choose an account with periodic capitalization, you should be careful to look at which account balance the interest rate is counted on. Some players expect the lowest balance over a certain period. It is a clearly unfavorable solution for you.
If you really want to save smart, be sure to save often. The easiest way to do this is to make automatic transfers to a savings account. You can suggest that the money goes away the same day as salary or remuneration comes into your account. In this way, you can build up a saving slowly but surely without having to think so much about it.
Read the rules regarding withdrawals
Last but not least, it is important that you have a certain amount of humor about what happens if you make withdrawals from your account. If you tie the money into the account for a certain period of time, for example a year, you can expect your interest rate to be adjusted down if you withdraw money. If you have an account without a term, it is important that you examine how the policy on “free withdrawals” looks. For some operators, you only have a couple, three free withdrawals per year. If you do more than that, you will normally pay a withdrawal fee.