High-Interest Savings Accounts: Should You Be Suspicious?

If you come across a high interest savings account you may be suspicious. While there are good deals available, those that seem too good to be true often times are.

What is the Competition Offering?

Before you do anything, compare the rate to those from other institutions. This will give you a better understanding of where the market stands, and whether the rate is suspiciously high.

Is the Bank FDIC Insured?

This has nothing to do with the interest rate being offered, but banks that are not FDIC insured are usually seen in a bad light. Often times, banks will offer a higher interest rate in return for a lack of account protection, which can include FDIC insurance.

Find Out if the Bank is in Good Financial Condition

Many banks, particularly those in bad financial standing, will do anything they can to attract new business. One of the best ways of doing so is by offering higher than average interest rates. The issue with this is that your account may not be FDIC insured, and/or the bank may be close to “going under.”

Find Contact Information

It makes sense to be suspicious if you find a savings account with a rate higher than the competition. To confirm or deny your thoughts, contact the bank and ask them why their rate is so much better than others. If no contact information is available or the representative avoids your questions, it is safe to say that it is time to move on to a more reputable institution.

Do not let your suspicions stop you from opening a high interest savings account. As long as you do your homework you should be able to determine if the bank and account is legitimate.

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