Whether you are saving for your retirement or putting away the pennies for your next summer vacation, having a good savings account can be the difference between successful saving and dipping into your hard-earned stash.
Some of the best saving accounts out there offer customers great interest rates, bonus incentives and are free of fees, among other benefits. But with literally thousands of accounts to choose from, how are you ever expected to find the right one for you?
By looking out for certain features, you can feel more confident when putting your money into the care of your chosen account provider.
Popular Types of Savings Accounts
Before we get into the nitty-gritty of what to look for in your savings account, it is important to be aware that there is more than one type of account besides a regular saver and knowing which will work to your advantage can go a long way in the selection process.
High-Yield Savings Accounts
A high-yield savings account may be beneficial to those looking to max out on interest in order to boost their savings and for people who are willing to squirrel away larger sums of money for longer periods of time. It is important to remember that this type of savings account does not allow you to make a withdrawal for a predetermined period, meaning that if you think you will need to withdraw cash from your savings on a regular basis, this may not be the right account for you.
Some of the best high-yield saving accounts offer an impressive 20 to 25 times more interest than regular accounts and of course, the more you put away, the more interest you will earn. Most accounts of this type are being opened online although there is a possibility to create an account using the same bank as your current account.
Some of the drawbacks of a high-interest savings account are that quite often, there is a minimum deposit requirement, and many accounts of this type come with some sort of fee.
Money Market Accounts
A money market account can be held at either a credit union or a bank and boast a lot of features that other types of saving accounts do not. For example, some of these accounts come with checkbooks and provide you with a debit card. However, there are restrictions on how often you can make withdrawals, in most cases this is limited to six times each month.
That being said, unlike a high-interest account, you are more free to access your money as and when you please, making this an ideal account to store an emergency fund. Many of the highest money market rates can be found at popular banks and so comparing these online couldn’t be easier.
Online-Only Savings Accounts
In this digital age, it is little wonder that some savings accounts are operated on a purely online basis, making it easier to manage your money at the click of a button. These accounts can be particularly useful to anyone looking to make automatic transfers and manage their money on the go.
The drawback, however, is that with no physical location, you cannot pop into the branch as you would normally to discuss any concerns. That being said, some of the best online savings accounts offer excellent chat and email customer support.
Tips for Finding a Savings Account
Once you have determined the type of savings account you want to open, the next step is to compare offerings.
There are pros and cons to all types of accounts and you need to be sure of what you are looking for. Do you want to get the best savings account rates or do you want easy access to your money? These tips will help you to make the best choice for your situation.
- Always have a savings goal in mind, as this will help you choose the right account. If you are looking to save over the long-term, a lower interest rate may not be a problem but if you want to save a decent amount over 12 months, the highest savings account rates will be a better option.
- Many accounts offer a bonus incentive such as paying additional interest if you make a minimum deposit each month, which can prove very fruitful if you can fulfill this criteria. That being said, if you don’t think you will be able to fulfill it, there is little point in opening an account on the off-chance that for one or two months you will make that minimum deposit.
- Look at the interest rates over time. Some banks will try to lure you in with the best savings interest rates available but then after some time, these rates will decrease to way below average, causing you to lose out.
- Look at the insurance details of the account. While all banks are protected by the FDIC, there are limits on how much money they will insure. Be sure to check out the maximum amount that is insured and if necessary, open another savings account elsewhere.
- Many savings accounts require you to make a minimum deposit upon opening and the type of account you open will depend on what this amount is. Be sure that you can afford this deposit or are willing to make it before signing any agreement. The same can be said for monthly deposits—some saving accounts will allow you to make deposits freely whereas others require a monthly deposit, so be sure to look into this carefully.
The sheer number of saving accounts available can make for pretty confusing territory when it comes to finding the right one for your needs. That being said, there are certain things that you can look out for when researching accounts giving you a clearer picture of which accounts match your needs.
On top of this, there are different kinds of saving accounts with each one offering different pros and cons, your circumstances and financial situation will play a part in which type of account will be most beneficial to you.