High Yield Savings: Get it While It’s Hot

Hey everyone, Rob West here. You've heard me talk about faith and finances for years and a common question I get is, how can I align my faith values with my banking decisions? Well, we recommend our friends at Christian Community Credit Union who've been serving Christians for over 67 years. Visit JoinChristianCommunity.com to learn more.

That's JoinChristianCommunity.com. As the saying goes, you don't need to be wealthy to start saving, but you do need savings to build wealth. Hi, I'm Rob West. The higher the yield, the faster your savings can grow. Today we'll explore high-yield savings accounts and whether these rates are here to stay. And then it's on to your calls at 800-525-7000. That's 800-525-7000.

You can call that number 24-7. This is faith and finance, biblical wisdom for your financial decisions. Okay, so this discussion is about savings accounts, not to be confused with investing accounts that usually involve holdings with higher risk. You need both, but today we're just talking about savings. A savings account is the ideal place for your emergency fund, as well as money set aside for big purchases you'll need in the next few years, like a new car.

Right now, some online savings accounts are offering yields around 4.5%, significantly outperforming most traditional brick-and-mortar banks. We can thank inflation, in part, for today's higher interest rates for borrowing or saving. The reason inflation leads to higher rates is because the Federal Reserve steps in and raises rates to fight inflation when it rises. In recent months, inflation has remained stubbornly higher than the 2% the Fed would like. That's caused the Fed to backtrack on earlier signals that successive rate cuts were in order.

In fact, they've been few and far between. That's not good news if you have a variable interest rate loan of any kind, like a credit card or home equity line of credit. It is good news, however, if you have money in a higher-yield online savings account. Banks typically set their rates according to the federal funds rate, which is set by the Federal Reserve. When the Fed started raising interest rates a few years ago to combat soaring inflation, savings yields followed suit, especially at online banks with lower overhead costs. Since then, these rates have remained high. A common question we hear at Faith and Finance is, how long will they stay that way?

Well, only God knows for sure, but we can make some educated guesses based on two key factors. First, the latest inflation numbers and second, how the Fed reacts to them. If inflation declines, the Fed may consider cutting rates, but if it holds steady around 3%, the Fed is likely to stay the course, meaning your high-yield savings rate should remain secure, at least for now. Now, let's say inflation drops to 2.5% and the Fed decides to drop interest rates by a quarter point. That might affect yields on savings accounts, but when would you likely see those lower yields? Well, as it turns out, it can take a while for savings account yields to follow Fed rate cuts. Banks tend to hold off a bit before lowering savings yields. It works the other way, too, with banks taking their time to increase yield rates when the Fed raises rates.

Now, why is that? Well, it seems no bank wants to be the first to raise or lower yields. They tend to wait until they see how the market and other banks react, so they stay within industry standards.

Above all, they want to remain competitive. With the onset of online banking, they know you can put your money anywhere. Typically, when the Fed cuts rates, it takes a few weeks or even months before banks start lowering savings yields. We're not saying you should move your money every time the Fed makes a small rate adjustment, but it's wise to watch the trends. If your bank's yield consistently lags behind what's available online, it may be time to switch.

For the best current rates, check sites like Bankrate and NerdWallet. By the way, if your bank's savings yields aren't to your liking, you might consider moving money to CDs or a money market account. They tend to have higher yields than a regular savings account. You don't necessarily have to switch banks to get a better yield. Okay, but what if you don't have your money in a bank at all?

No, I'm not saying keep it under your mattress. I am saying that you can get competitive yield rates on savings accounts at a credit union. A lot of folks are generally unaware that credit unions may offer higher savings yields than traditional banks. Credit unions are not-for-profit organizations that return revenues to members in the form of better interest rates and lower fees. Now, we know of one credit union, Christian Community Credit Union, that does all of that, but also gives part of its revenues to advance God's kingdom. Christian Community Credit Union works with ministries to share the love of Christ and spread the gospel around the world. It's also an underwriter of this program. You can find out more about this amazing organization at joinchristiancommunity.org.

That's joinchristiancommunity.org. Well, I hope that was helpful today. The key? Take advantage of these high yields while they last. Your calls are next, 800-525-7000.

We'll be right back. Have you ever wondered where your money goes when you deposit it in a bank? Christian Community Credit Union believes in helping advance God's kingdom through everyday financial transactions. For over 67 years, they have provided values-aligned banking solutions to thousands of Christians and ministries. Consider Christian Community Credit Union as your banking institution by visiting joinchristiancommunity.com. Membership eligibility required. Each account is insured up to $250,000.

This institution is not federally insured. Thanks for joining us today on Faith and Finance. I'm Rob West. So grateful to have so many of you that call into the program regularly and looking forward to hearing from you today.

We've got a couple of lines open beyond what we've already got in place. So if you have a question today, we perhaps can get you an 800-525-7000. Let's go down to my hometown, Fort Lauderdale. Hi, John.

Go ahead. Hey, how you doing today? I was just trying to figure out what would be the best way to kind of like either help my spouse start to combine our finance together or like how can I have a conversation with her to let her know like, hey, look, it works if we put our money together, they're keeping it separate, because it always seems like you're out of money. And now I'm out of money. And it's like burning on both ends.

You're spending here, I'm spending here, instead of we combine together, we can kind of have a plan. And I'm trying, I just want to be better at it. So it is really hard.

And she's just not not going forward. She's like, so I don't want to buy you a special gift. Like, I don't know. And I'm like, it's really hard. So yeah, I just want some advice. Well, John, I appreciate that.

And I think you're right to kind of lean into this. And the idea is that, you know, this is going to require a lot of communication, a lot of openness and a lot of trust. But isn't that what the marriage relationship is?

You remember, Jesus told us in Mark 10, seven, a man shall leave his father and mother and hold fast to his wife, and the two shall become one flesh. And I think that becoming one does extend to our checkbook, just like every other area of our lives. And so we've got to talk through that. And we've got to recognize that when we come into the marriage relationship, we're bringing our differences. And that includes our money differences, you know, our relationship with money, the way we view money, the way we handle it, how tightly we grip it, or how loosely we hold it. A lot of that comes from not only how God has wired us, his, you know, thumbprint on each of us as our creator and how he's created us uniquely in his image, but also our upbringing. You know, I've read studies that say that a lot of the way we see and view money was in place by the age of nine.

And it has to do with how plentiful or the scarcity of money in our homes, you know, what was modeled for us. So we bring all that to bear in the marriage relationship, and then we need to try to put that together. And that's not easy without a lot of understanding of each other and how God has wired us and then being able to appreciate the differences and our temperaments and so forth. But secondly, with a lot of open and honest communication as well. John, what do you feel like is at the heart of this? Is it really, she's concerned about feeling kind of constricted or limited?

Or is there trust issues? What do you think is at the heart of her desire to keep finances separate? She was more into, like, she does not want to have somebody counting her money for her every time. And I tried to explain, like, it's not, I'm not going to count your money. I'm not going to look at your money.

You have this much. It's not about that. It's about kind of like you take your bill. We take our bills. We make the decision how we're going to pay these bills, knock these bills out. So we have all the bills. You've got a car payments, you have our rent, we have no satellite bill, and those things taken care of.

So anything extra you want to do because she likes to travel, anything extra you want to do, now we can build and budget towards those things together. So you don't have to do it by yourself, you know, and that's the kind of things I'm trying to figure out. Yeah, well, and I think that's key. And really, we need to get away from the mine and yours mentality. Because, again, you guys are now one flesh, God's design for marriage is unity and oneness. And that certainly includes the finances. And you know, what we say is that obviously, we remain individuals, but that marriage partnership requires trust, it requires openness, it requires communication. That's especially true when it comes to the area of finances. And the challenge is when we keep everything separate, it fosters that mine and yours mentality. But when we put it together, it promotes trust, because neither of us are making hidden purchases.

And you know, everything is in full view. But that doesn't mean that you all can't be reflected in terms of your personalities and your interests and your passions separately. It's just that you step back as a married couple and say, Okay, where is God leading us? And how can money be a tool to accomplish his purposes aligned with our values? And, you know, ultimately, where are we going? And then we create a spending plan that reflects both of you. And perhaps there's a portion of that spending plan that's just for her to do what she wants with. And there's a portion that's just for you for the things you enjoy. But the big decisions are all made jointly, and in full view of one another. And I think that's the vision that you all need to bring to the table here.

It's not about you scrutinizing it. And it's not about I don't want you looking at my money, because the reality is, john, and this is I think, you know, an important truth for all of us, is that it's it's not either of yours, it's God's it all belongs to him, the earth is the Lord's and the fullness thereof, and all that dwell therein. And that includes money, a gift from God that he is entrusted to us to be faithful with. And part of that faithfulness as now one flesh, a married couple is to say, God, how do we surrender everything to your purposes? How much do we keep for us?

And that means you all need to land on what your lifestyle is going to be? How much do we enjoy? How much do we use to provide? How much do we give away? But it's not a matter of each having your own accounts, it really should be viewed as one account.

And I think mechanically, it should be combined into physically one, checking and savings account, because the moment you try to keep those separate, you know, it's just going to foster that mind and yours mentality. Let's do this, you know, perhaps she'd be willing to work through a great resource in this area. It's a book called money and marriage God's way.

It's written by the my good friend Howard Dayton, the former host of this program. And, you know, I think maybe your request of her is Listen, honey, I'd like to explore God's heart as it relates to money and marriage. I don't have all the answers. But let's look to his word. And I've been told this is a great resource for us to do that. And perhaps if you guys would work that through that maybe, you know, a chapter a week or something, and just be willing to hear her side of it. Maybe you both agree to pray and ask for God's wisdom as you work through it. And then on the other side of it, see if it doesn't change how you apply these principles in the daily handling of it.

of your money management decisions. Does that sound good? This I'm good. Thank you so much. I appreciate it.

Absolutely. John, let's do this. You stay on the line, our team will get your information. And we'll get that book out to you right away as our gift to you.

Again, it's called money and marriage. God's way we appreciate your call today. 805257 thousand a few lines open today to Chicago. Gladys, go ahead. Hi, Rob, I appreciate your program so much. And I pray that the Lord has just blessed you even more tremendously than he already has. And my question, I've heard you speak about qualified charitable deductions. And I wanted to know, I am 70. And I wanted to know, if with my time that I can use that, can I use it for tithes, but exactly what is it? Yeah, so once you hit 70 and a half, and you do have to get to that point, you can do what's called a qualified charitable distribution.

And here's the benefit. So are we talking about an IRA and individual retirement account that you have? Yes. Okay.

Yeah. So with the IRA, the only way you can get that money out without paying tax on it is through a qualified charitable distribution. So let's back up when you put that money in whether you put it into a 401k, and then rolled it to an IRA, or went straight in the IRA. In either case, you got a deduction on that money. So it was excluded from your taxable income, and then it grows tax deferred. And then you pull it out after 59 and a half and you add it to the IRA. And you add it to your taxable income at that point. Well, the qualified charitable distribution is the only way to get that pre tax money in the IRA out without ever adding it to your taxable income. And so it's a huge benefit there. And you can use it to send money to any charity, including your church, because that's a not for profit organization.

So yeah, if you're tithing to your church out of after tax money in your checking or savings account, if you were to replace that with money coming out of your IRA, and just give the same giving, now you're getting it out without adding it to your taxable income, a huge benefit. So let's do this. I've got to take a break. We'll talk a bit more off the air.

We'll be right back. Faithfi app will provide you with wisdom, community and simply help you stay on track with your finances. We have three money management options to choose from.

So find an option that fits your unique needs. It's available on desktop or mobile. Simply go to faithfi.com and click app to get started. Are you a financial advisor or CPA seeking to build your practice on biblical wisdom? Not only does the certified kingdom advisor education provide you with deep biblical insights, the CKA designation sets you apart. Each year, almost 50,000 people search for a Christian financial advisor. Join our community and share your expertise with clients looking for someone who shares their faith and values.

Find more information at kingdomadvisors.com slash get certified. Great to have you with us today on faith and finance helping you apply God's wisdom to your financial decisions and choices. Let's head right back to the phones. By the way, we have three lines open. If you want to call right now, you can get right through 800-525-7000 to Tennessee. Hi, Travis, go ahead.

Yes, thank you so much for taking my call. I'm looking at possibly looking for new employment. And I'm really trying to see what it is that I have in my in my job now compared to other other employment. And a big part of my, my work now is that I'm in a pension plan. And it's a pension plan to which I do not have to contribute. And I'm trying to really like how do I compare that to 401k, which are basically offered by any other employer today.

But if you could offer any advice on that, that would be that would be great. Does that kind of make sense? Yeah, so you're trying to determine how much is that benefit that you'd be losing as you consider your next job? Yes, compared to other retirement plans. Yes, sir.

Yeah, yeah. And what are they putting into that pension for you? Do you know each month?

There's actually nothing that's put into it. I just earn an amount for each year. I do know for each year that I'm there, I gain 1.6% for each year that I work. And then they multiply that by the average of my highest five years of compensation. Okay, but but the amount that they're adding to the pension each year currently is only 1.6% of your income, even though it's based on that five year average.

That's, that's right. Well, they don't actually contribute. It's just, that's how much I would earn. That's how much that would earn from the pension plan when I retire. It's one and a half percent for each year worked. So they're not actually contributing to anything. It's just payable upon retirement.

I see. So it would be converted to a pension income stream at retirement. But what happens if you leave early? Is there any lump sum that you'd be able to accrue based on the years of service? I would not get a lump sum, but however I invested and I would not lose it, I would still be able to draw based on the years of service that I have now.

Okay, so let's talk a little bit about the matching are just two different approaches. One is, you know, they're going to put it in every year, the same amount for every person based on your comp. And you just have to reach the vesting period and you get a check for life.

And then we've, we've moved from defined benefit to defined contribution, where they put the onus on you and say, hey, it's up to you, we're going to give you the vehicle, the 401k, but it's up to you to contribute to it. And hopefully they're going to offer some matching, which the matching is, you know, what allows you, you know, to contribute to it. And hopefully they're going to offer some matching, which the matching is, you know, what allows you, you know, to juice, if you will, your contribution. So you, you know, hopefully they'll provide, let's say, matching up to 4%. And so you put in, you know, that 4%, and you're going to get 100% return on your money on top of it. Now, you haven't found your next employer, you're just trying to understand all this prior to making that selection. Is that right?

Yes, that's right. I'm just trying to see, well, what, what really, what's the value of what I have now? And if I want to, if I want to go forward and step up in employment, I've got to be able to surpass what I've got now.

I'm just trying to figure out what exactly is it that I have now? Yeah, I mean, I guess my thought is, unless I'm missing your question, you know, what you have right now is already locked in, because, you know, you're going to get that, as you said, you've met the vesting requirement. And so that's kind of a guaranteed benefit that you're going to have. Now, the question is, how can can you contribute to add to your overall retirement income options by way of your next employer? And I would say what you're probably going to find unless, you know, you're in a situation where you're not getting the return on your next employer. next employer. And I would say what you're probably going to find unless, you know, you're in a situation where you're working for the government or something like that, you're probably going to find the defined contribution plan as the more readily available option.

And so, you know, I think it's ultimately, what can you put in every month as salary deferral out of every paycheck, and you're just going to want to know, are they going to provide any kind of matching because that's a benefit you would want to factor in, and then compare against other offers that you get from other companies. But, you know, it doesn't really relate to the pension you had with your prior employer, because that is what it is. You're not losing that.

You'll be able to take that down the road. And the key would just be, what options are you going to have with your next employer? And how, you know, rich is that benefit as you compare that to others? Does that make sense? Yes, yes, it does.

Okay, yeah. So I think as you kind of interview and think about where you want to go and align your passions and giftings with what, you know, is available to you, I think this just needs to be part of that assessment, as you consider, you know, not only the compensation you're going to get, but the benefits and part of that benefit is how generous is the retirement plan? And am I going to be making enough to be able to contribute to it and maintain my lifestyle? And hopefully there's some matching there. And then now you're going to have a growing 401k or 403b alongside this guaranteed pension.

And that plus social security all working together is what ultimately, you know, will provide your income streams and retirement. So hopefully that helps you, Travis, I appreciate your call today. If we can serve you in any other way along the way, don't hesitate to reach out. God bless you. 800-525-7000 is the number to call.

Let's go to Ozark, Arkansas. Hi, Raymond, go ahead. Hey, thank you for taking my call. God bless you and the work you're doing to help people be good stewards of what the good Lord has served us with. Thank you. My question is, I've just come into this retirement from the military, from Camp Lejeune contamination, and they've decided to give me $1780 a month.

And they gave me back pay for six months from when I signed up for that program. I've got three houses, I've got plenty of income already. And this is just a windfall for me. And I just want to be a good steward of it.

At 1780, my son's telling me buy Bitcoin. Okay. And you want my advice on that?

Yes, sir, I do. I wouldn't do it. Yeah, you know, here's the thing. I mean, the blockchain technology underneath all the cryptos is here to stay. It's not going anywhere. It's good technology. There's a lot of uses for it. But the idea of cryptocurrency, number one is very unproven. I mean, it's kind of the wild, wild west based on, you know, how it's going to be handled from a regulatory standpoint. Clearly, President Trump is more favorable on the crypto space, not a central bank digital currency. But I would put Bitcoin as an investment in really the most speculative category. You know, so for somebody who, you know, has considerable assets, and they might want to take 10% of their investable assets and say, I'm comfortable because, you know, I've been blessed with with much, and therefore I can put, you know, a small portion of my investable assets into a more speculative category. And I'm going to allocate a portion of that to Bitcoin. Well, maybe. But, you know, anything else, I would say it's really off limits just because of the volatility and the uncertainty around it. So I'd be more in line with what the Bible says, which is what it calls steady plotting. I think that's maybe a better approach. So pay down debt, give it away or put it in some good solid mutual funds.

That would be my suggestion. God bless you, sir. And thanks for your service.

Hey, we couldn't do this without our team each day. So grateful for my producer, Devin Patrick, for our call screener, Sandy Dickinson, and helping me with the research today, Mr. Jim Henry, plus the entire team here at Faith Buy. I hope you have a great day. Lord willing, we'll be back to do it all over again tomorrow. We hope you'll join us then. May God bless you. Bye bye. Faith in Finance is provided by Faith Buy and listeners like you.