Financial Stability During Recession

A great way to deal with recession is to save as much as you can. If you have funds in the bank, you have the ability to pay for your bills and purchase your daily needs even though if you do not have a good source of income.

Recession could easily get someone out of job – the country is currently at its record unemployment rate in three decades. Experts suggest that the problem might continue for a few more months. That would mean that your job right now might be in trouble. It could easily get a lot worst if you do not properly prepare for recession.

Opening a savings account is not enough if you want to save money and make it grow. Because of inflation, keeping your money in the bank for a good number of years through regular savings account is not recommended. Recession and inflation could practically cut the increase you earn from your regular savings account. You need to have something better than savings account which will assist you in the future.

There are two well known ways of saving your finances without too much risk. ING Direct savings and CD (Certificate of Deposit) are two services that you can consider which can help you significantly over time.

ING Direct

ING Direct is one of the biggest financial companies in the world. Although the company is relatively new compared to other financial institutions, they have become one of the largest companies mainly due to their unique business setting. They are usually geared towards businesses wherein they provide financial loans. The most unique feature of ING Direct is their banking mode is virtual transaction. Everything could be done online.

As a consumer, you can use their services if you want to save your money for the future. Since they cannot provide that physical assurance to their customers, they compensate the lack of a physical office in many cities around the world by giving a better interest rate. Expect an interest rate to be relatively better compared to most savings transactions in regular banks. Their annual rate is known to be within the average of 3.5%.

The disadvantage of ING Direct is also in its advantage. By being virtual, they do not provide the assurance a regular bank would have. Transactions with ING Direct are also considered a little bit risky because of the aggressive movement of ING Direct with their finances.

Certificate of Deposit

Certificate of Deposit or CD is a very popular option for those who wanted to keep their money safe for a very long time. Certificate of Deposit is more like your time-bound deposit account but only a lot longer and the required deposit is a lot higher. The smallest CD would usually start is in $1,000. There are banks that do offer $500 starting account but the interest rate is significantly lower.

When it comes to interest rate, CD is relatively lower compared to ING Direct. Usually the rate would be within 3% up to 3.4%. Although the rate is relatively lower, your funds are a lot secure in this form of financial services. CD is transacted with a local bank which means your money is protected with the bank insurance. If something goes wrong the FDIC or the Federal Deposit Insurance Corporation will refund your money of up to $250,000.

These are the two options you can consider if you want to have a long term plan with your finances. Although you cannot use them today, you can certainly enjoy them in the future. It is a small investment for now but it will increase without being dragged down by inflation.