A few weeks ago, an acquaintance of mine informed me that she finally built up a travel fund of $5,000. She was planning a multi-week trip to Spain, France, and Portugal, and needed cash to cover hotels, food, and excursions. She has plans to book her flights with Air France/Flying Blue miles, but she hasn’t earned any rewards to cover accommodations or spending while she is there.
Saving up to that amount is great, I told her. It’s probably also more than she needs as well if she plans to stay in affordable condos or bed and breakfasts and travel like a normal person.
Since her trip isn’t until next summer, she asked me about where she should keep her savings. I told her that I keep my travel fund (as well as my personal savings) in a CIT Bank Savings Builder Account. No, they don’t pay me to say that. I use a CIT Savings Builder account because it gives you 2.45% APY with no fees. All you are required to do is a) maintain a balance of at least $25,000 in your account, or b) deposit at least $100 in your account. And you only need $100 to get your account started.
My friend said she was shocked to find out she could be earning 2.45% on her money without a huge balance. Her current savings are with Chase, and she is only earning .01%!
Fortunately, there really are a ton of online bank accounts that come with higher than average interest and zero to low fees. Some of the best options available today include:
- Ally Savings — earn 2.20% APY
- Marcus by Goldman Sachs — earn 2.25% APY
- Citi High-Yield Savings — earn 2.36% APY
I use CIT Bank because they offer slightly more than everyone else, but also because you only need to deposit at least $100 in your account each month to score their highest rate. I also like the fact their savings accounts don’t have hidden fees.
The Bottom Line
If you’re saving up for a big trip and have enough money in your account, it makes sense to open a targeted savings account that earns more interest than average. The difference in the amount of money you can earn can be a lot more than you think.
Let’s use my friend’s $5,000 travel nest egg as an example. She is currently earning .01% APY on her savings, which would yield exactly $5 if she saved that money for ten years. If she earned 2.45% APY, on the other hand, she would $1,369.27 over the same timeline.
That’s free money, so why not take advantage?
Where do you keep your travel fund? Why?
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Source: frugal travel guy