I’ve been hearing a lot lately on the woeful return for savings products which are safe, but offer low interest rates. It generates the question for many on whether it’s worth the effort to put money away in these types of accounts.

My take on it is we really do need to continue to put our money into savings. No matter what we’re getting on those accounts, whether savings accounts, CDs, money market accounts or Treasuries, we’re getting the market rate, and whatever that rate is, depending on doing a little research on who is offering the best rates, is all we’re going to get until the market changes.

The problem with some people raising these questions is it could influence someone to foolishly quit saving and waiting around for better interest rates to return.

Why that doesn’t work is the money you have for savings today needs to be put away while you have it. What’s the alternative? Spending it? That makes no sense at all. You don’t spend money you’ll never have returned to you just because interest rates aren’t what you think they should be. Yet that’s just what some people are advocating.

What needs to be put in perspective, is savings rates are never going to be high and will never be the key investment to build your wealth with. Savings is to build up a protective moat for you so when unexpected difficult economic times come, you have cash in place to tide you over while you make decisions and take steps concerning what to do about it.

It’s more about keeping your money safe than it is increasing it. This doesn’t mean we shouldn’t shop around for the best returns we can get, just that we have to understand what savings is. If we have high expectations that aren’t realistic, we could use that as an excuse to not put money away. That would be a huge mistake.

For a number of reasons the Federal Reserve isn’t going to raise interest rates any time soon, and so those waiting around to put money away for safe keeping and in case of emergency will find themselves unprepared if things continue on a difficult economic road (which is expected), with no money to tide them through.

Savings aren’t really to make you a lot of money, it’s to build up a protective money stash in order to give you a chance to work things out if you’re fired, laid off, or some other economic emergency happens which you would need money for in order to buy you time.

In the end, that’s the real purpose of savings, to buy you enough time to right the circumstances without devastating you’re entire life and causing you to lose everything. Interest rates are only secondary to the issue, while having some savings set aside for emergency is the primary reason for having an account.

Don’t let low interest rates keep you from continuing to save. It really has nothing to do with the overall purpose of having a savings account of some type, as I’ve shown you here.

Many people believe that searching endlessly for a small percentage increase in a savings account of some sort, or a bank CD, is the key to building up your wealth in a significant manner. This is unfortunately not true, and depending on your income bracket, isn’t worth the time doing so.

When I mention not being worth your time, by that I mean when people move their money in and out of accounts as soon as a better deal arises, making it a time-consuming effort to track all the changes, as well as making the new deposit and transaction.

By far the most important part of any savings strategy is to make a simple plan, work the plan, and make few adjustments along the way.

This breaks down to finding the best interest rate and looking at the fee structure which could eat into your capital if you don’t manage your account well.

Once you find a solid interest rate, then it’s a matter of working your plan over and over again on a monthly basis. That usually means putting money faithfully into an account to build up a financial safety net, and/or build up a nest egg for retirement.

Just like people who think they’re players in the stock market when they attempt to time the market and in fact, make it look like “they’re a player in the stock market.” In other words, they are trying to impress people, not really build their wealth.

The truth is the majority of savings and other investing strategies should be fairly boring, with nothing much happening over a period of time, other than general fluctuation which don’t mean that much one way or another.

As far as the time factor, if you’re not making some serious money when you spend time transferring funds to a new account because of a better interest rate or introductory offer, it’s just not worth the time. You would need many thousands of dollars to justify it, and even then it would have to be significant enough to pay you for the time you’re spending doing it. Only you can determine if it’s worth it or not.

I’m not saying there won’t be an occasional time to do this, but it should be a higer enough rate to make a difference in your savings, and of course there shouldn’t be any fees for early withdrawal or some other penalty if you’re hunting for the highest interest rates at all times.

When it comes right down to it, consistency concerning making your deposits over a long period of time will outperform those moving in and out of the market, no matter what the investment is.

An even stronger benefit is the mindset you’re developing which will be your strongest financial asset as you work the best ways to build your wealth within your risk tolerance. Sticking to a well thought out plan is by far the best and safest way to save and build up your capital.

For those that don’t know, a money market account is a form of savings account offered by a bank or credit union. The major difference is for the most part and under most conditions they offer better interest rates than a regular savings account. With Ally Bank that’s the case, and their solid interest rate and other very competitive parameters for their money market account make it a great place to put your money you want to keep safe or build a nest egg and protective moat around.

A money market account isn’t to be confused with a money market fund, which is a mutual fund that invests in low interest rate securities.

Anyway, as far as the Ally Bank money market account, you can even open an account with $0.00, and of course once you make your first deposit, start earning its high interest rate of 1.55 APY (as of this writing). This makes it a great money market account for new customers as well as old, along with those just starting out in their savings strategy as well. Many other banks require a much higher deposit to meet their best interest rates, which for the most part, are lower than Ally Banks at this time.

Here are the guidelines of Ally Bank’s money market fund as listed on their web site:

• Open with $0
• No minimum balance
• No monthly fees
• Check card and first 50 checks are free
• No ATM fees — if another bank’s ATM charges you a fee, we will refund the first four, up to $6 per month
• Daily compounded interest for maximum earnings
• FDIC insured Maximize your coverage
• Six transactions per statement cycle with no fees. Why only 6
• Your actual variable rate will go into effect when you make your opening deposit

Do keep in mind that by law you can only withdraw or transfer from your account six times in a statement cycle (monthly), so you could get charged a fee if you go beyond that with most banks, including Ally Bank.

But the point of savings in the form of money market fund is to save, so it shouldn’t be a problem for anyone to keep under that figure. After all, that’s the reason we should have a checking account.

Still, this is a really good way to save, and the Ally Bank money market account is one of the best in the country at this time.

Now that economic reality has hit many of us, and we’re scrambling for places to put our money which offer good interest rates and rewards, banks and financial institutions like U.S. Bancorp are responding to the new trend of cutting back on spending and putting more of our money into savings.

To that end U.S. Banccorp is offering an incentive of $50 in the form of a Visa gift card for customers to deposit a minimum of $1,000 into a special savings account created for that purpose. Another part of the deal is customers must agree to transfer funds to their savings from their checking account on a monthly basis.

Customers who participate in the savings account with U.S. Bancorp, which launches in December 2009, will also receive another $50 if they maintain a balance of at least $1,000 for a twelve-month period.

This is of course a great deal. No matter what the actual interest rates offered in the program are, you already receive a 10 percent return on your money guaranteed if you keep the $1,000 in the account for a year. Not bad at all. Add to that the interest you get and it’s a super deal in these difficult times, even if the 10 percent is offered in the form of two $50 gift cards.

Another good service being offered to help us save by U.S. Bancorp, along with other banks, it to give customers the option of having an automatic transer fo $1 from their checking to their savings each time they use their debit card; a very good service for those who have trouble putting money away for savings, or always forget about it.

This is a win/win for everyone involved, as consumers want to put away more money, and offering reward programs is a good incentive to get people to participate in that. Automating the process is also another proven method to help us save, and that should be a great service to offer while consumers continue to focus on the need to build up a nest egg to financially defend against the tough economic conditons that exist now, and in preparation for the long haul and the uncertainty concerning keeping a job will continue for some time.

Keep your eyes open for deals like the one offered by U.S. Bancorp, as not only does it help you build up a good nest egg to protect in times of trouble, but pays you a significant amount that is definitely worth the time and effort to take advantage of.

One great way to save that we tend to forget as we look for the best interest rates on savings accounts, money market accounts, money market funds and CDs, etc., are the ways we can save money through lowering our cost of living. With that in mind, Wells Fargo (NYSE:WFC) is offering an extremely low mortgage refinance rate of 4.66 percent. This is a 30-year fixed rate.

To understand what that really means, the all-time low, as far as it relates to a weekly average (not a one-day low), that number is 4.61 percent. So Wells Fargo is just over that rate at this time.

All of this is subject to fairly rapid change, but the ballpark figure should remain around these numbers, even when they fluctuate.

With these low mortgage refinance rates being at optimal levels, if you’re in the position to and are thinking in terms of refinancing, you many not get another chance at low interest rates like this for some time.

In order to manage your expectations properly, keep in mind that these rates are offered under the assumption of good credit and the amount of equity you have in your home.

If you’re ok in those areas, the lowest interest rates will be of great benefit to you. But even if you’re not qualified for the absolute best rates, it’s worth checking it out and applying, as the interest rates you would normally get when taking into consideration your credit score and equity in your home should be lower than it would be anyway.

In other words, your situation can’t be changed, and because interest rates are low at this time, if you qualify for a refinance your rates should still be better than you would have received from past period of higher interest rates.

Of course if you have significant equity in your home and a strong credit score, you’ll get the very best refinance interest rates out there to have, and probably the best rates that will be available for years into the future.

Don’t wait for refinance to become popular in order to benefit from these great interest rates for refinancing your mortgage. This is a great personal finance tool to make your cost of living decline, while at the same time freeing up more money to invest if you choose. It doesn’t get much better than that for the average person.

First Century Bank of Gainsville, Georgia has by far the best APY of three month CD interest rates available, standing at 1.35 percent at this time.

I’m doing a review on them because they are the best rates at this time for a place to put your short-term money, but also as a quick lesson in understanding the give-and-take related to good interest rates on safe investment products.

Normally when you’re offered the highest or close to the highest interest rate for safe investment vehicles, there’s a caveat that comes with it, and in the case of the 3-month CD from First Century Bank, that is a minimum deposit of $10,000.

There are other banks offering fairly close interest rates on 3-month CDs which require far less deposits. For example, there is one that offers a 1.10 APY which requires $0 for a deposit and no monthly fees (as of this writing). Another offers a 1.21 APY with only a $1,000 deposit required.

Banks can also offer 3-month CD rates that compete internally with one another; with smaller deposits required for a smaller interest rate.

Obviously if you have the capital on hand, there’s no complications as to the decision to make: the highest APY is the only way to go. But even then, as in the case of the 3-month CD from First Century Bank, there are other competitors who require a $10,000 deposit who have an interest rate far below the APY First Century has. So just because there’s a large deposit required doesn’t mean the interest rate is competitive. I’ve seen just today as I was writing this an $10,000 deposit only giving you 0.50 interest on a 3-month CD.

This isn’t rocket science, just ask a couple of questions when you’re searching around for the best performing short-term CD to be sure you’re getting the best rates you can. Don’t assume anything.

As far as the strategy of investing in a 3-month CD, the reason you do that is because of the unsurety of the interest rate environment we live in, along with inflationary pressures, which have already put the squeeze on consumers in regard to certain products and services.

A short-term CD allows you to get a decent return while keeping your money safe, and at the same time not tie it up in a way that inflation or rising interest rates make it a bad investment. 3-month CDs are one way you can protect yourself while building up your wealth a little and having your money available in a short time when interest rates and inflation start to rise.

Not only is Discover Bank offering a great rate of 1.90 APY on their 12-month CD, but includes a great provision concerning if you lose your job. In that case you can withdraw your money if you need it without any early withdrawal penalty. You need to open it by December 31, 2009 to get the benefits and rate.

Keep in mind concerning the job loss provision that it has to be involuntary, as you can’t just quit your job and then withdraw your money. But if you are terminated or laid off, suffer a strike or are locked out from work in any way, you get the benefit. A leave of absence, quitting or retiring doesn’t trigger the removal of the early withdrawal penalty. Still, a great feature in difficult economic circumstances.

For those who are self-employed at the time of opening a CD with Discover Bank, an act of God like a fire, property damage in general, inventory damage or closing of the business for fire or flood must be experienced to be able to withdraw your funds without a penalty for early withdrawal. For business owners or contractors you must have an account open for 30 days or after renewal to receive the benefit.

While this may sound restrictive to some, in reality if you operate in good faith these are very reasonable, especially considering the high rate of return offered and the possibility of a no-penalty early withdrawal under circumstances out of your control.

For employees, to qualify for the CD you must work at minimum of 30 hours a week, while if you’re a full-time student you can qualify if you’re 15 hours a week or more.

A minimum balance of $2,500 must be maintained to get the $1.90 APY and benefit of penalty-free withdrawal if you qualify and need it.

Considering the national average for a 12-month CD at the top 50 banks as measured by deposits is 0.70, this is a really great return.

Discover Bank also offers an 18-month CD at a 1.95 APY.

Ascencia, a division of PBI bank, offers a good return of 1.63 percent APY on its 6-month CD, based on a 1.62 percent return compounded monthly.

For an initial deposit the minimum is $500 and the maximum $250,000. All accounts are protected for up to $250,000. An extension of the Emergency Economic Stabilization Act of 2008, which increase deposit protection from $100,000 to $250,000 per depositor has now been extended to December 31, 2013 by Congress, and all CD accounts a Ascencia fall under those guidelines.

Here are some of the other CD rate offered at different maturities by Ascencia. All of these have a $500 minimum on the initial deposit and a maximum of $250,000.

1 Year CD (12 Months) 1.98% with a 2.00% APY
2 Year CD (24 Months) 1.98% with a 2.00% APY
2.5 Year CD (30 Months) 1.98% with a 2.00% APY  
3 Year CD (36 Months) 1.98% with a 2.00% APY 
5 Year CD (60 Months)  2.25% with a 2.27% APY

Notice that all of the CDs from 1 year to 3 years offer the same interest rate of 2.00% APY. Unless you believe rates will rise above that, the 1-year CD would be a better way to go. If you believe interest rates will decrease below that, a longer term CD would be better to invest in, as it would lock in a better rates.

Be sure you are committed to any of these CDs, as you aren’t allowed to withdraw any funds from the accounts for a 90-day period, and of course there will be the usual early withdrawal fees applied of you decided to withdraw funds after that.

A CD continues to be a good place to safely park your money, and the early withdrawal penalities are actually good for you, as it forces discipline on you unless you absolutely need the money in a major emergency situation.

While October was a poor month for CD rates, as almost all CD rates dropped, from 3-month CDs to 5-year CDs, TotalBank was still able to hang on with its Total e-CDs, to lead in the 3-month category, with a 1.64 interest rate for their online-only CD. CDs with a length of 3, 6, 9 and 12 months also offered a 1.64 interest rate, with a 1.65 APY when investing a minimum of $1,000.00.

Even though TotalBank has participated in the overall drop in CD rates for the month of October, they still continue to lead the way for 3-month CDs with the 1.65 APY they offer at this time. For all of October, 3-month CD interest rates dropped 3 basis points in the industry, which has experienced an overall plunge of 82 basis points so far in 2009.

Along with the fall in interest rates for 3-month CDs in October, 6-month CDs, 1-year CDs, 2-year CDs and 5-year CDs also fell from the month before, with the 6-month CD dropping by 9 basis point in October; the 1-year CD by 10 basis points; 2-year CDs fell by 7 basis points and 5-year CDs were off by 6 basis points.

For the 3-month CD, it fell from 0.64 percent to 0.41 percent for the month of October, one of the lowest levels in 20 years, as measured by a weekly survey performed by Bankrate during that time. 

Still, as measured in this economic climate, TotalBank continues to offer the highest-yielding 3-month CD on the market, which is has done over the last four months.

Long-term CD rates fell faster than short-term CD rates, but even so, they are still standing at record lows.

I would still look at investing in short-term CDs or other short-term investments going forward, as it relates to safety, as long-term, safer investments could and have been getting clobbered in this low-interest rate environment.

So with the money you’re investing to protect and hold, a short-term CD like the 3-month CD offered by TotalBank is a good way to go at this time.