Has the pandemic depleted your savings? Here’s how to build it back up. (iStock)
If the last year has taught us anything, it’s that a flush savings account is critical.
With millions of Americans struggling due to layoffs, shutdowns and other lingering effects of the coronavirus pandemic, emergency savings have been a lifeline for many households. In fact, about 14% of Americans have seen their savings depleted entirely, according to a CNBC poll.
If you’ve watched your savings decline over the course of the last year, there’s still hope. You can use one of these five saving strategies to start building it back up:
- Open a high-yield savings account
- Consolidate debt
- Refinance your loans
- Get a cash-back credit card
- Try a round-off app
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1. Open a high-yield savings account
A high-yield savings account can be a smart way to boost your savings efforts.
High-yield accounts come with APYs — or annual percentage yield — that's as much as 10 times that of traditional bank accounts, allowing you to earn interest and increase your balance much faster.
Not all accounts are created equal, though — terms, fees and rates can all vary. So in order to reach your savings goals, you should use a tool like Credible to shop around and compare your high-yield savings account options before moving forward.
How do I choose a high-yield savings account?
An account’s APY is the number one factor to consider, as it will directly impact how much you can save and how quickly. To make sure you’re not leaving money on the table, compare high-yield accounts on the Credible marketplace.
You should also consider the account’s minimum balance, maintenance fees and withdrawal limits. Some accounts will only allow a certain number of withdrawals in a given period, which can make things difficult if you need to access your cash.
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2. Consolidate debt
If you’ve got several loans or credit cards to your name, then you’re probably paying quite a bit in monthly interest. To reduce this interest and free up more money for your savings, you might think about consolidating your debts with either a debt consolidation loan or a 0% balance transfer card.
Both methods allow you to streamline your debts and lower (or even eliminate) your interest costs. To see how much a loan can save you, use a personal loan calculator. If you opt for the balance transfer card, make sure you have a plan. Ideally, you’d pay off the balance entirely or transfer it to a new card before your 0% interest period expires (it’s usually a year or less).
Again, shopping around is critical if you want the best rates and terms, so use an online marketplace like Credible to find the best debt consolidation loan or balance transfer card for your needs.
HOW DOES DEBT CONSOLIDATION AFFECT YOUR CREDIT SCORE?
3. Refinance your loans
Refinancing your debts can also be a smart move. Interest rates are pretty low these days, so if you’ve had your car loan, mortgage or student loans for a while, there’s a good chance you can lower your rate through refinancing. This would mean having a smaller monthly payment and putting less toward interest too, making it much easier to save extra money and boost those balances.
As with any financial product, you’ll want to compare at least a few lenders before applying for a refinancing. Use Credible to check out mortgage and student loan refinancing options now.
CAN REFINANCING A MORTGAGE HURT MY CREDIT SCORE?
4. Get a cash-back credit card
When used right, cash-back cards can be an excellent tool for increasing your savings. Use the card for your monthly expenditures — things like rent, groceries, utility bills, etc. — and then pay off the card at the end of each month.
After a few months of this, you should have a pretty decent point balance built up, which you can redeem for cash and deposit directly into your savings account.
Just keep repeating the process and make sure to stay on top of that balance. Forgetting to pay it off each month will mean serious interest costs, especially if you’ve been using the card regularly.
5. Try a round-off app
Round-off apps can be clever ways to reach your savings goals, too. These apps round up your purchase to the nearest dollar, depositing the difference in your bank account.
For example, if you bought a pack of gum for $2.49, the app would round that purchase up to $3, putting the additional $0.51 in your savings.
It basically automates your savings for you, using only very small, almost unnoticeable amounts.
The bottom line
The pandemic has been hard on many Americans’ personal savings. If you’ve depleted your savings account in the last year, there are options available to help you improve your financial situation. Head to Credible to shop around for a high-yield savings account, debt consolidation loans or other options that can help you save money and build that emergency fund back up.
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