November 2008
Better ways to beef up your savings
Direct deposit
Have part of your paycheck deposited directly into a high-yield online savings account that charges no fees, like the one at HSBC, which currently earns 3.5 percent interest and has a free linked interest-bearing checking account.
Automatic investments
Many employers allow you to directly deposit your paycheck into more than one account, so you can keep all of your savings on track. You can have money sent to an IRA, a 529 college savings plan, and investment accounts, for example. T. Rowe Price allows systematic contributions of as little as $50 in its IRAs or mutual funds instead of the usual $1,000 to $2,500; at Fidelity, it’s $100 instead of $2,500 or more. For 529s, it’s often lower, like $25.
Cash-back credit card
Use a cash-back credit card with higher rewards for categories in which you spend the most, such as gas or groceries. Get one that lets you take the cash rewards as a check or as a credit toward your next month’s purchases. Avoid cards that have low limits on the amount you can earn.
Have part of your paycheck deposited directly into a high-yield online savings account that charges no fees, like the one at HSBC, which currently earns 3.5 percent interest and has a free linked interest-bearing checking account.
Automatic investments
Many employers allow you to directly deposit your paycheck into more than one account, so you can keep all of your savings on track. You can have money sent to an IRA, a 529 college savings plan, and investment accounts, for example. T. Rowe Price allows systematic contributions of as little as $50 in its IRAs or mutual funds instead of the usual $1,000 to $2,500; at Fidelity, it’s $100 instead of $2,500 or more. For 529s, it’s often lower, like $25.
Cash-back credit card
Use a cash-back credit card with higher rewards for categories in which you spend the most, such as gas or groceries. Get one that lets you take the cash rewards as a check or as a credit toward your next month’s purchases. Avoid cards that have low limits on the amount you can earn.
Posted: October 2008 — Consumer Reports Magazine issue: November 2008
