How to Maximize that $800 in Your Bank Account Right Now
Got an extra $800 in your bank account?
You might have some cash to spare from your tax refund. Or maybe the extra money in your bank account represents payment from a stimulus check.
At any rate, having nearly $1000 in extra cash can be a temptation to spend.
For example, you might want to buy that new TV you've had your eye on. And taking a vacation could seem like the perfect stress-reliever.
But if you've worked hard to save some extra money, it's important to make the most of it.
So how do you do that? If you want to maximize $800 in your bank account (or any amount of money, for that matter) here are five smart ways to do it.
1. Earn interest with a high-yield savings account
Having extra money in your checking account can give you a buffer or cushion. But, unless you have an interest checking account, that money's not growing for you.
That's where a high-yield savings account comes in handy.
High-yield savings accounts can offer competitive rates for savers. Depending on the bank, you might earn an interest rate that's 10 to 25 times higher than the national average.
Online banks can also offer high-yield savings accounts with lower fees than what you'd pay at a traditional bank.
That's because online banks usually have lower operating costs than brick-and-mortar banks. So they pass those savings on to their customers in the form of higher rates and fewer fees.
When comparing the best high-yield savings accounts there are a few things to look for, including:
- Interest rate you can earn
- Annual percentage yield (APY)
- Minimum deposit requirements
- Minimum balance requirements
- Savings account fees (such as wire transfer or excess withdrawal fees)
The goal is to find a high-yield savings accounts account that offers the best rates and lowest fees.
Just keep in mind that online banks typically don't have branches. So consider what kind of online and mobile banking access and/or ATM access you'll have to your savings.
2. Invest with as little as $50 using a robo-advisor
If you're interested in building wealth for the long-term, investing can help you get there.
When you invest money, you're not putting it into a savings account, money market account or a certificate of deposit account.
Instead, you're putting your money into the market. It's riskier than a savings account but you have the potential to grow your money in a significant way if your investments pay off.
So where do you start investing when you only have $800 (or less) to build a portfolio?
A robo-advisor can be a great option for beginning investors. Robo-advisors make it easy to set up an automated investing plan with as little as $50.
You can build a portfolio on autopilot while investing small amounts of money over time. And many robo advisors charge lower fees than what you'd pay for a traditional financial advisor.
If you're interested in investing now, it's helpful to compare the best robo advisor options.
Specifically, look at things like:
- What you can invest in (i.e. stocks, exchange-traded funds, bonds, managed portfolios, etc.)
- Minimum investment requirements
- Annual management fees
- Advisory services
- Access to investing education and research tools
One of the most important rules to know about investing is that time is on your side. The sooner you get started, the more time your money has to grow through compounding interest.
So whether you want to invest $50, $800 or any other amount, there's no time like the present to consider your robo advisor options.
3. Protect your loved ones with an affordable life insurance policy
Life insurance is something most people need to have. Here's why.
When you have life insurance in place, you can create a financial safety net for your loved ones.
That's important if you're married and/or have kids, or you have debts that you don't want to leave behind for your loved ones.
For example, if your parents cosigned your private student loans and something happened to you, they'd be left with that debt.
Using some or all of the $800 in your bank account to buy a life insurance policy means your loved ones will have the money they need to:
- Pay for any final expenses
- Eliminate a mortgage or other outstanding debts
- Cover college expenses for your kids if you're a parent
- Replace lost income if there are people who depend on you financially
The younger and healthier you are, the cheaper it is to buy life insurance generally. When comparing policies, there are two basic options.
First, there's term life insurance. This kind of insurance covers you for a set time period. So you might have a 20-year term life policy or a 30-year policy.
Permanent life insurance covers you for life as long as you pay the premium costs. And some permanent life insurance policies build cash value over time that you can borrow again.
Between the two, term life insurance is usually the cheaper option. And it could make more sense if you don't think you'll need to be covered for life.
You can compare premiums for both term and permanent life insurance to decide which one is the best fit for your needs and budget.
Keep in mind:
What you pay for either one can depend on things like your age, health and whether you smoke.
4. Protect yourself from high veterinary bills with an affordable pet insurance policy
Pets can be a source of comfort. But when one of them gets sick or hurt, you could end up with a pile of veterinary bills.
If you're saving money for emergencies, you could draw on that cash to pay. But if your dog or cat requires a major surgery that could quickly deplete your savings.
Buying pet insurance can help you head off a potentially tough financial situation.
Pet insurance policies can help with the cost of veterinary care.
Here's how pet insurance works at a glance:
- You purchase a policy that offers the coverage your pet needs
- Your policy has a set premium that you pay for coverage
- When you file a claim, you pay the required deductible
- Your policy covers any remaining eligible costs
Pet insurance can be a good investment if you have pets and you're worried about high vet bills. Just like any other kind of insurance policy, shop around to find the best coverage at the most affordable rates.
5. Minimize fees with a no-fee checking account
You need a checking account for paying bills and depositing your paychecks. And your debit card may be your preferred way to spend if you want to avoid credit card debt.
But why pay more for a checking account than you need to?
The worst checking account fees can include monthly maintenance fees and overdraft fees. But you might also pay fees for things like wire transfers, ATM transactions or account research.
Avoiding fees doesn't mean you have to ditch your checking account altogether. Instead, you can look for a no-fee checking account option.
You can find no-fee checking at traditional banks. But it's also worth looking at online checking account options.
Aside from fees, here are some other things to consider when comparing checking accounts:
- Minimum deposit requirements to open an account
- Minimum balance requirements, if any
- Checking account features and benefits (i.e. mobile check deposit, online bill pay)
- How you can access your money in-person (i.e. branch or ATM access)
- How you can access your money on the go (i.e. mobile and online banking)
If you're ready to move your money to a no-fee checking account, the next step may be switching banks.
You'll need to transfer over any bill payments or direct deposits you've set up. And you'll need to unlink your old account from any budgeting or personal finance apps you've connected it to.
Making sure the switch is done correctly can help you avoid triggering any unexpected fees.
Make Your Money Count
If your bills are paid up and you have extra money to spare, give some thought to the best ways to use it.
Making some small changes now could pay off in the long-term if you're able to save more money and invest. Aside from the extra cash you already have, think about how you can bring more money in.
Using a 0% APR balance transfer offer to consolidate credit card debt, for example, can help you pay off your debt faster. And you can save money on interest in the process. Or you may start a small side hustle to boost your income.
Regardless of where extra money comes from, finding ways to make it work for you can help you get the most out of every dollar and cent.