PEOPLE would often consider the banks as a depository institution, limited
to the function of being a place where we can keep our money safe. Seldom
do we find people who'd consider investing their money in banks because of
its small interest rates.Banks, regardless of whether it is a
commercial bank or a thrift institution, usually offers 3.5 percent for a
five year tie-up arrangement or two percent per annum at the most.
Because of the banking system's long deposit agreement period, most
would rather take their money to the stock market where they stand to get
fairly more than what banks could offer for a period that isn't really
that long.
360 degree swing
But then, when recession hit the United States and the rest of the
world, stock markets around the world suffered a slump. People see
recession as something that gives them no guarantee or safety of their
money while in the stock market.
Instead, they would opt to have their money taken into the bank not
just for safety but to earn fairly a little more than having it at the
stocks. It seemed that prospects of earning higher rates could be most
likely better in a bank.
Finding other options
Despite the global financial meltdown, there are however still other
institutions where your money could earn at a decently higher rate. These
are community banks, credit unions and cooperatives. These institutions
don't offer unbelievably high yields, yet seemed realistic enough,
comparatively higher interest rates than commercial banks and safe too
(for as long as you know how much would be the most that you could invest
without hurting your cash flow to much).
What they offer
Community banks and credit unions offer an earning pegged at five
percent based on a balance of $ 25,000. For one, Union State Bank of
Atchinson (USBA) in Kansas pays 5.01 percent interest rate for a $ 25,000
checking account balance. Opening an account in the USA only requires $
25.
Credit unions on the other hand are offering comparatively higher
interest rates for cash deposits than the banks, while imposing lower
interest rates on loans and credit cards.
But wait. It is imperative that we know the restrictions imposed by
most (if not all) community banks and credit unions. Among those are
online arrangements in receiving monthly statements and payment of bills.
It is also a requirement to set up automatic payment and the use of a
debit card in purchasing. Debit cards are to be used at least 10 to 15
times a month.
Failure to comply with the restrictions would gradually diminish the
interest rate of your cash investment/ deposit in these community banks or
credit unions. Interest rate of one's cash investment/ deposit is reduced
by 0.3% percent per month for failure to meet the account requirements.
On the brighter side, interest rates are reverted back to the higher
rate the following month provided that requirements are met.
There are also other schemes where you could earn even more. However,
there is always the risk accompanying higher yields.
Under a financial pyramid scheme, an investment could earn five percent
at the least. In fact, in other countries (like the Philippines)
pyramiding groups offer as much as 20 percent interest rate for a shorter
period of time, although the scheme has already been outlawed there.
As to where you would want to put your money, there is always a choice.
You may take a high yield investment scheme on a higher risk basis or
think of your investment's safety and guarantee for a minimal return. GP
