Alternatives to a traditional bank savings account.

Dear Terry:
I would like to know your suggestion for transferring some of my funds, which I have in a regular bank statement savings account. For the small amount of interest being earned, I feel I may be keeping a bit too much in this type of account. It is roughly in the area of $12 to $13,000, give or take, However, I like the fact that this is a rather liquid type of account from which I can make withdrawals at any time, which I do make fairly regularly. Do you know of any other similar alternative type of account which would still be liquid, but pay a little bit better rate of interest? Thank you for any suggestion you may have regarding this.

Terry Says:  Nope.  That’s just the state of the world these days — low interest rates!  If you start searching around for higher rates, you expose yourself to the potential of loss, or perhaps delays in accessing your money. Those delays could cost you more than the little bit more you might earn in interest. This is your liquid, “safe” money — which I define as “chicken money” — money you can’t afford to lose and might need to use at any time.

Check with your bank about using a money market deposit account, rather than a “passbook” saving account.  Or consider a “government-only” money market mutual fund from Fidelity or Vanguard.  But you’ll find only small differences in interest rates.  For that amount of money the difference in interest earned would be miniscule.  Don’t fret!