New options can increase nest egg

For many people, the term "savings account" conjures up images of grandmother's oldfashioned savings passbook. Others think of savings as protection against overdrafts.

Passbook savings and linked savings accounts still exist and remain viable financial tools, despite their relatively low rates of return. But many of today's modern savings accounts now combine practical, secure banking along with uptodate features such as anytime access and impressively higher interest rates.

Rising rates of return

During volatile economic times, investing money in a reliable and secure savings account may even yield higher returns than other fluctuating investment markets. Some institutions offer rates as high as 5.25 percent, which can be very attractive for those who are not comfortable with risk, such as seniors with limited assets. A safe and reliable high-yield savings account can be an appealing investment option- one that offers the liquidity and flexibility not found in CDs, yet with comparable returns.

Savings alternatives

In addition to higher interest rates, today's savings accounts offer direct deposit capability, 24hour access to money using secure online banking, and more liquidity than many other cash investments. In contrast, CDs require cash to be tied up for a set amount of time, typically from six months to five years, and money market accounts limit the amount of transactions allowed per month.

A number of well known institutions offer high yield savings accounts online. Investors should make sure the institution has secure online banking for immediate access at any time of day. With online banking, you are only a few clicks away from monitoring deposits and accessing account information, giving clarity and peace of mind to today's savers.

Features to look for

Besides the interest rate, there are other things to consider when comparing accounts: monthly service charges, minimum balance requirements, and the number and size of transactions allowed per month.

Some financial institutions offer a tiered interest rate model that rewards customers by offering higher interest rates for higher balances, essentially encouraging investors to save more. The tiered model may give you the highest possible yields on your money. The account features should be reviewed and compared to find the combination that best fits into the investor's financial plan.

One thing is clear, today's high yield savings accounts can reap tremendous benefits in both rate and convenience and should be considered as part of an overall cash management strategy.

Pierre Habis is managing director and chief retail officer for Countrywide Bank, N.A., a member of the Countrywide Financial Corporation (NYSE: CFC) family of companies. For information, visit www.countrywidebank.com.