PROVIDENCE, R.I. (WPRI) — Deciding where to put your savings can be a daunting task, but with interest rates on the rise, savings accounts are finally seeing good returns.
Donna Sowa Allard of Sowa Financial Group said the first step to financial freedom is to look at how much money you owe and pay it down as much as possible.
“It is very hard to save money if you are paying interest toward debt,” Allard said. “I would say having a plan to pay down that debt efficiently is really important.”
The Federal Reserve raised interest rates seven times last year, which Allard said means those with savings accounts “can finally get some yield on [their] savings.”
The majority of savings accounts right now have a return of more than 4%.
Allard suggests that, those considering opening a “certificate of deposit” (CD) account, to not keep their money in it for an extended period of time.
“Twelve months is probably optimal, I wouldn’t go out more than two years at this point,” she said. “That’s really the sweet spot for where you are going to get the best interest rate.”
Allard said those looking to open a high-yield savings account are also in lucky, with many institutions offering interest rates higher than 3%.
“It really is about what your own financial goals are,” she said when deciding whether to open a CD or high-yield savings account.