Today's low-interest-rate environment means that consumers have to do everything they can to pick up the slack. When interest is hard to come by, it is especially important not to let any opportunity to earn interest go to waste. One way to do this is to make sure your savings are properly segmented.

Different types of bank accounts have differing characteristics to meet a range of needs. Your job is to make sure you match your money with the right type of account.

The reality is that most people let money accumulate in accounts by inertia rather than by active decisions. This can mean not getting the most out of your money, and in a low-interest-rate environment, that could translate to getting next to nothing from your savings. You not only need to use different types of bank accounts for different needs, but you need to segment your money among those accounts to make the optimal use of them.

Keeping your funds in the right place

Here are six things that will help you segment your savings efficiently:

  1. Know your cash flow. Take a look at the timing of how you earn and spend money. While people tend to have their paychecks directly deposited into checking, you may want to consider having yours deposited into a savings account, and then make one monthly transfer into checking to cover your cash flow needs. This will help reduce the amount of money you have sitting around in a checking account not earning interest, and should also help you stick to a monthly spending budget.
  2. Pay attention to minimums. One caveat to the above is to make sure you do not incur checking account fees by dipping below minimum balance requirements. The best way to avoid this is to find an account with a very low minimum balance.
  3. Remember that time is money in banking too. One way time is money in banking is that the longer you commit your money, the more you should earn. Generally, savings accounts pay more than checking accounts, CDs pay more than savings accounts and long-term CDs pay more than short-term CDs. Therefore, unless you have a specific need for your money, you should direct it into the longest-term vehicle possible.
  4. Shop for the best bank for each account. You might not find both the best checking account terms and the highest savings account interest rates at the same bank. Be prepared to split your money to employ the best bank for each type of account.
  5. Pay special attention to CD penalties. With interest rates showing signs of rising, you need to be alert to the possibility that you might want to get out of some of your CDs early. CD penalties for early withdrawal are an important consideration in a rising rate environment.
  6. Consider online accounts. Many of the bank accounts offering the highest interest and lowest fees are online accounts, so make sure you include these in your search.

While it may take a little time to set up your accounts the right way, most of the time those accounts will be earning interest with no additional effort on your part. This is what can make the investment of a little time in segmenting your savings pay off in the long run.

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How 'segmenting' can earn you better bank terms