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The First Thing You Should Do to Increase Your IncomeBy
Tuesday, August 10, 2010
Your bank probably pays you less than 0.2% interest...
According to The History of Interest Rates by Homer and Sylla, interest rates on bank deposits have generally fluctuated between 5% and 15% over the last 2,000 years. They've been higher – they reached 16% in 1981 – and they've been lower.
But generally speaking, a 5% interest rate on your savings is a fair expectation, by historical standards.
Right now, interest rates in America are at zero percent. They're also at zero percent in Japan. They're at 1% in Canada and in the Eurozone. And they're at 2% in China.
Checking accounts at the most popular banks in America pay pathetic interest rates. My Bank of America checking account, for example, pays 0.1%. Citi pays 0.1%. US Bank pays 0.2%. And Chase pays 0.01%.
Here at DailyWealth, we've suggested dozens of strategies to earn high income in a zero percent world. We've told you about virtual banks, tax-lien investing, preferred stocks, stock market bonds, blue-chip compounders, and covered call writing. But ending your relationship with the large national bank franchises is the easiest and quickest way to increase your income...
Huge banks have million-dollar marketing budgets and powerful brand names. They can afford to offer such low interest rates because new customers keep coming... and existing customers won't make the effort to move.
Regional and local banks don't have this luxury. Offering higher interest rates is the only way they can attract and keep deposits.
Bankrate is the best way to find high-yield bank accounts and CDs. You can search a variety of products, using either a national search or a local search. The website will tell you which banks offer the best interest rates. It will also give you the bank's safety rating.
I recently fired Bank of America and moved my banking relationship to EverBank, in Jacksonville, Florida. EverBank promises to pay interest rates that are in the top 5% of the nation. Right now, EverBank pays 1.51% in its money market account and 1.46% in its checking account, the highest rates in the country. You'll also get a 2.25% "teaser" rate for the first three months.
EverBank has around $10 billion in deposits, which puts it among the top 100 banks in the country by deposit size. Bankrate gives it a four-star rating.
Even though EverBank is a regional bank, I can use my EverBank bankcard in any ATM I want – even in gas stations – and I never have to pay ATM fees.
Of all the banks in America, EverBank has the most experience dealing with customers over the Internet and telephone. That's because EverBank was an Internet "e-bank" eight years ago. EverBank even lets me deposit checks from my desk at work using a home scanner.
If you're using the large national banks for your checking account, you're wasting money. There are hundreds of safe, well-managed banks out there that would appreciate your deposit... and pay you accordingly.
Good investing,
Further Reading:
Whether you've got $5 million in the bank or $50,000, you want to know it's safe. This is where Joel Nagel, an asset-protection attorney and a good friend to DailyWealth, comes in... A few months back, he showed readers how to keep their cash safe from the taxman, insane U.S. government policies, and another failure in the banking system. Get the details here: The Easiest Way to Open a Foreign Bank Account.
Market NotesTHE BIG MONEY ISN'T BUYING THIS RALLY Not much has changed since our "where's the big money?" note from three weeks ago...
To recap, a healthy bull market is driven by the buying power of mutual funds, hedge funds, and insurance company funds. These investors control multibillion-dollar portfolios. Only with strong buying enthusiasm from these folks can a real bull market flourish. Today's chart shows anything but enthusiasm...
Our chart displays the past six months of trading in the Dow Industrials investment fund (DIA). This is a basket of America's biggest, most important companies. Below the price chart, you'll find a window displaying the fund's daily trading volume. The red bars represent trading volume on days the fund declined. The gray bars represent trading volume on days the fund advanced. The taller the bar, the greater the volume.
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